Optimism Spurs a Broad Rally

The Weekly Update

Week of February 25, 2019
By Christopher T. Much, CFP®, AIF®

The Week on Wall Street
Stocks rallied last week as optimism about a potential U.S.-China trade deal grew. The S&P 500 advanced 0.80% during the 4-day trading week to 2,792.67. The Nasdaq Composite improved 0.86% to 7,527.54, and the Dow Jones Industrial Average gained 0.64% to 26,031.81.

The renewed prospects for a trade pact were not the only development investors found appealing last week. There were indications that the Federal Reserve might be a bit less committed to its plans to raise interest rates further this year.

A Look at the Fed Minutes
There were no surprises from the Federal Reserve’s Board of Governors, who released the transcript from their January meeting on Tuesday. Investors pore over the meeting minutes looking for clues about the Fed’s next move on short-term interest rates.

Fed policymakers appeared split on what’s next. Some felt another rate hike was needed to help slow the strong economy, while others favored a “wait-and-see” approach.

Home Sales Slump
In January, existing home sales were at their slowest pace since November 2015, and down 8.5% year-over-year. One factor: rising home values. Last month, the median single-family home sale price was $247,500, almost $7,000 higher than a year ago.

Mortgage rates have now fallen for three consecutive weeks, a development that may influence home buying decisions in coming months. Thursday, a Freddie Mac survey found the average interest rate on a 30-year, fixed-rate loan at just 4.35%.

Final Thought
The Dow Jones and Nasdaq have posted gains for nine straight weeks and are now at levels unseen since early November. Concerns over volatility have decreased, but that does not mean it is off the table. Whatever the market does in the coming weeks and months, remember your investing strategy should be based on your goals, risk tolerance, and time horizon.

THE WEEK AHEAD: KEY ECONOMIC DATA
Tuesday: Fed chair Jerome Powell begins two days of testimony on monetary policy in the Senate.
Wednesday: The National Association of Realtors releases its latest pending home sales index.
Thursday: The federal government provides its first estimate of fourth-quarter economic growth.

Source: Econoday / MarketWatch Calendar, February 22, 2019
The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision. The release of data may be delayed without notice for a variety of reasons, including the shutdown of the government agency or change at the private institution that handles the material.

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS
Tuesday: AutoZone (AZO), Home Depot (HD), Medpace (MEDP)
Wednesday: Apache (APA), Best Buy (BBY), Office Depot (ODP)
Thursday: Anheuser-Busch (BUD), Dell Technologies (DELL), Splunk (SPLK)

Source: Morningstar.com, February 22, 2019
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
Past performance is no guarantee of future results. Data collected from Investors FastTrack software.
https://quotes.wsj.com/index/SPX
https://quotes.wsj.com/index/COMP
https://quotes.wsj.com/index/DJI
https://www.marketwatch.com/story/dow-reclaims-26000-and-ends-at-3-12-month-peak-as-stock-market-levitates-on-tariff-hope-2019-02-22
https://www.bloomberg.com/news/articles/2019-02-20/fed-minutes-show-officials-unsure-on-need-for-rate-hikes-in-2019
https://tradingeconomics.com/united-states/existing-home-sales
https://www.washingtonpost.com/business/2019/02/21/mortgage-rates-fall-third-week-row
Optimism Spurs a Broad Rally2019-02-25T13:58:38-04:00

Dow, S&P, Nasdaq Climb Higher

The Weekly Update

Week of February 18, 2019
By Christopher T. Much, CFP®, AIF®

The Week on Wall Street
Stocks ended a good week on a high note, as hints of progress in U.S.-China trade talks encouraged investors.

When the closing bell rang Friday, the S&P 500 settled at 2,775.60, after rising 2.50% in five days. The Dow Industrials gained 3.09%, to close Friday at 25,883.25. The Nasdaq Composite improved 2.39% to 7,472.41.

Shutdown Averted
Wall Street breathed a sigh of relief late last week as Congress passed a bill to keep the federal government funded. President Trump signed the measure on Friday.

The development is expected to have a positive effect on consumer sentiment, which may influence the financial markets. During the shutdown, consumer confidence hit an 18-month low.

Retail Sales Unexpectedly Slip
Thursday, the Census Bureau announced that retail sales fell 1.2% in December. This was the largest monthly decline in more than nine years and fell short of expectations. Economists polled by Bloomberg anticipated a small gain.

Was the slow December mostly a reflection of consumer anxieties about the shutdown and the stock market? If so, it is possible that retail spending may see an uptick. (It should be noted that these monthly numbers are often revised later.)

Inflation Holds Steady
The Consumer Price Index (CPI), the most widely followed measure of inflation, was flat in January for a third consecutive month. Year-over-year, overall inflation is running at just 1.6%.

The CPI is one of the key factors the Fed considers when assessing the economy and determining what lies ahead for interest rates.

What’s Ahead
U.S. and Chinese negotiators face a March 1 deadline to reach a deal to extend the current tariff truce. In March, tariffs on many Chinese imports could rise to 25% from 10%. President Trump said Friday that he is open to postponing the March deadline if it appears an agreement may be near.

ECONOMIC CALENDAR:
Monday: Presidents’ Day holiday (U.S. financial markets closed).
Wednesday: Minutes of the January Federal Reserve policy meeting are released.
Thursday: January existing home sales.
Friday: Federal Reserve Vice Chairman Richard Clarida speaks in New York.

Source: Econoday / MarketWatch Calendar, February 15, 2019
The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision. The release of data may be delayed without notice for a variety of reasons, including the shutdown of the government agency or change at the private institution that handles the material.
Past performance is no guarantee of future results. Data collected from Investors FastTrack software.
https://markets.wsj.com
https://quotes.wsj.com/index/SPX
https://www.washingtonpost.com/politics/trumps-border-emergency-the-president-plans-a-10-am-announcement-in-the-rose-garden/2019/02/15/f0310e62-3110-11e9-86ab-5d02109aeb01_story.html
https://www.bloomberg.com/news/articles/2019-01-29/u-s-consumer-confidence-declines-to-18-month-low-amid-shutdown
https://www.bloomberg.com/news/articles/2019-02-14/u-s-retail-sales-fall-most-in-nine-years-amid-stock-plunge
https://www.reuters.com/article/us-usa-economy-inflation/lower-gasoline-prices-restrain-u-s-consumer-inflation-idUSKCN1Q21N1
https://www.apnews.com/c322842d356248d2860bb77e84641ca3
Dow, S&P, Nasdaq Climb Higher2019-02-19T19:38:09-04:00

FSA vs. HSA

Health Savings Account vs. Flexible Spending Account

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FSA vs. HSA2019-02-14T09:55:14-04:00

Stocks Post Small Weekly Gain

The Weekly Update

Week of February 11, 2019
By Christopher T. Much, CFP®, AIF®

The Week on Wall Street
Major U.S. stock benchmarks eked out slight gains last week, with corporate profit reports and news about U.S.-China trade negotiations vying for investor attention over five trading sessions.

The big three ended the week little changed from where they settled the previous Friday. The Dow Jones Industrials rose 0.17% percent, while the S&P 500 Index gained 0.05% percent. The NASDAQ Composite ended the week up 0.47%. Looking at international stocks, the MSCI EAFE index retreated 0.47%.

Earnings Scorecard
As of last Friday, 66% of all S&P 500 companies had reported fourth-quarter earnings. So far, 71% of these firms have announced earnings exceeding estimates, and 62% have seen revenues top projections

Halfway through earnings season, 2019 future guidance has been a mixed bag for S&P 500 companies. For Wall Street, future earnings can be just as important as current earnings. We keep a close eye on both.

Tariff Tensions
March 1 is the 90-day deadline set by President Trump for a trade deal with China. If no agreement is reached, the U.S. may consider a new round of tariffs. On Thursday, news that President Trump and Chinese President Xi may not meet before the March 1 deadline added to the market volatility.

The decision by the U.S. on new tariffs may hinge on how much progress has been made toward a new agreement. We don’t expect that to become clear until the deadline nears.

State of the Service Sector
Many indicators help economists take the pulse of the overall economy. The Institute for Supply Management keeps a critical, but not widely followed, index, which helps gauge the health of the service sector.

The January reading on this index came in at 56.7. Any reading above 50 shows that the service industry is seeing solid growth.

Final Thought
Over the next several weeks, we’re expecting more volatility as the markets digest economic news, a new wave of corporate earnings, and twists and turns on the geopolitical front. We will be watching to see if anything changes our short-term and long-term view. If you have any questions, don’t hesitate to contact us.

ECONOMIC CALENDAR:
Wednesday: January’s Consumer Price Index, which measures monthly and yearly inflation.
Thursday: December retail sales figures (a delayed release due to the government shutdown).
Friday: January’s preliminary University of Michigan consumer sentiment index, a gauge of consumer confidence levels.

Past performance is no guarantee of future results. Data collected from Investors FastTrack software.
https://markets.wsj.com/
https://quotes.wsj.com/index/XX/990300/historical-prices
https://insight.factset.com/earnings-season-update-february-8-2019
https://www.instituteforsupplymanagement.org/ISMReport/NonMfgROB.cfm?SSO=1
Stocks Post Small Weekly Gain2019-02-11T17:14:29-04:00

Markets Gain Again

The Weekly Update

Week of February 4, 2019
By Christopher T. Much, CFP®, AIF®

Last week closed out one of stocks’ top January performances in years. In fact, both the S&P 500 and Dow posted their best January results in at least 3 decades. For the week, major domestic indexes were also up. The S&P 500 gained 1.57%, the Dow added 1.32%, and the NASDAQ increased 1.38%. The Dow’s performance marked its 6th week of gains in a row. Internationally, MSCI EAFE stocks also posted growth, rising 0.91%.

What drove stock results last week?

As discussed in our previous market update, last week provided a number of details for investors to focus on. Here are some key items that contributed to market performance:

Federal Reserve Meeting: The Fed chose not to increase interest rates above its current 2.25% – 2.50% target. When releasing this update, the central bank noted that it would be “patient” when deciding about any future increases.

Market Impact?
The Fed’s signal that additional rate hikes may not be imminent helped improve market confidence.

Corporate Earnings: By Friday, nearly half of S&P 500 companies had released earnings data for the 4th quarter of 2018. Of them, 70% had higher earnings-per-share than expected and 62% beat revenue projections. Right now, the S&P 500 is poised to have its 5th quarter in a row of double-digit earnings growth. However, the currently projected growth of 12.4% is lower than it has been since 2017.

Market Impact?
With worries of disappointing results calmed, some investors are feeling relieved by earnings season so far.

January Labor Report: The latest Employment Situation release from the Bureau of Labor Statistics showed that the economy added 304,000 new jobs in January. At the same time, the unemployment rate increased slightly, as the count included furloughed federal workers. The latest data also indicated that December job growth was lower than initially reported.

Market Impact?
The January job growth was much higher than investors expected and implied the partial government shutdown minimally affected the U.S. economy. These perspectives helped drive stock gains on Friday.

This week, we will continue to monitor corporate earnings season and will follow any developments in the U.S.–China trade negotiations. We will also watch for new data releases, especially those previously delayed by the government shutdown. If you have any questions, we’re here for you.

ECONOMIC CALENDAR:*
Monday: Motor Vehicle Sales, Factory Orders
Tuesday: PMI Services Index, ISM Non-Mfg Index
Wednesday: Jerome Powell Speaks
Thursday: Jobless Claims

*The federal government shutdown may delay some data releases.

Past performance is no guarantee of future results. Data collected from Investors FastTrack software.
https://www.cbsnews.com/news/stocks-today-sp-500-posts-best-january-since-1987/
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX&region=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=%21DJI&region=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO
https://www.reuters.com/article/us-usa-stocks/wall-street-advances-on-washington-temporary-shutdown-deal-idUSKCN1PJ1GK
https://www.cnbc.com/2019/02/01/stock-market-payrolls-data-earnings-in-focus-.html
https://www.msci.com/end-of-day-data-search
https://www.federalreserve.gov/newsevents/pressreleases/monetary20190130a.htm
https://www.bostonglobe.com/business/2019/01/31/delivers-biggest-monthly-gain-since/BKTzYZj4uz4D2ApeKaLhWM/story.html
https://www.factset.com/hubfs/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_020119.pdf
https://www.cnbc.com/2019/02/01/stock-market-payrolls-data-earnings-in-focus-.html
https://www.bls.gov/news.release/empsit.nr0.htm
https://www.marketwatch.com/story/stock-futures-steady-ahead-of-january-jobs-report-2019-02-01?dist=markets
Markets Gain Again2019-02-04T12:55:06-04:00