Weekly Update

The Weekly Update

Week of July 30, 2018
By Christopher T. Much, CFP®, AIF®

Markets experienced a push-and-pull last week between data indicating strong economic growth and lagging performance from several tech stocks’ earnings reports. Domestic indexes had mixed results, as the S&P 500 gained 0.61%, the Dow was up 1.57%, and the NASDAQ dropped 1.06%. International stocks in the MSCI EAFE had more of an uptick, gaining 1.32% for the week.

On Friday, July 27, we received the initial reading of 2nd quarter Gross Domestic Product (GDP). The report indicated that the economy grew at a 4.1% annual rate between April and June. This reading was the fastest pace in almost 4 years-and significantly higher than 1st quarter growth. Markets, however, had a relatively mild reaction to the GDP data due to rumors predicting even higher results.

Let’s dig beyond the headline GDP growth number to see what else it tells us …

The Weekly Update

Week of July 22, 2018
By Christopher T. Much, CFP®, AIF®

On Friday, July 20, stocks lost a small amount of ground after President Trump escalated his threats of increasing tariffs on China. However, strong quarterly earnings reports from several large companies helped provide balance in the markets. For the week, domestic indexes experienced little movement, as the S&P gained 0.02%, the Dow was up 0.15%, and the NASDAQ dropped 0.07%. International stocks in the MSCI EAFE had slightly more change, with a 0.63% gain.

What We Learned Last Week

• Corporate earnings rose in the 2nd quarter
  As of July 20, 87 S&P 500 companies have released their 2nd quarter data. Of these companies, 83.9% surpassed analysts’ estimated results. In fact, the earnings season is going well enough that analysts have increased their growth projections. They now expect to see companies average 22% earnings growth over the past year, up …

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The Weekly Update

Week of July 16, 2018
By Christopher T. Much, CFP®, AIF®

Last week, trade tensions with China lessened somewhat, while the 2nd quarter corporate earnings season started with mixed results. Against this backdrop, domestic stocks experienced sizable growth. By market’s close on Friday, July 13, the S&P 500 was above 2,800 for the first time since February 1. Meanwhile, the Dow was above 25,000, and the NASDAQ had hit a new record. For the week, the S&P 500 gained 1.50%, the Dow added 2.30%, and the NASDAQ was up 1.79%. International stocks in the MSCI EAFE increased as well by 0.16%.

We are now two weeks into July, which means the 1st half of 2018 is behind us. As we analyze what may be ahead in the markets, we’ll also strive to understand what has happened so far this year.

2nd Quarter Update: Key Details to Know

• Domestic indexes had …
  

The Weekly Update

Week of July 9, 2018
By Christopher T. Much, CFP®, AIF®

Domestic stocks only traded for 4 days last week, due to the Independence Day holiday. In that time, all 3 major domestic indexes posted positive results for the week. The S&P 500 added 1.52%, the Dow gained 0.76%, and the NASDAQ increased 2.37%. International stocks in the MSCI EAFE were up as well by 0.56%.

Once again, trade and tariffs were a major topic on many people’s minds. On Friday, July 6, the U.S. and China placed $34 billion of duties on each other’s imports. However, instead of focusing on the trade-war escalation, another topic captured many investors’ attention: the latest jobs report.

What did we learn about the labor market?

This month’s report about the employment situation provided several indications that the economy continues to be healthy and growing.

1. The economy added more jobs than expected.
Economists predicted approximately 195,000 …

Happy 4th of July

We wish you a safe and enjoyable holiday, surrounded by family and friends.

The Weekly Update

Week of July 2, 2018
By Christopher T. Much, CFP®, AIF®

International trade concerns continue to create uncertainty in markets around the world. Despite the markets’ slight rises on Friday, June 29, they recorded losses for the week. The S&P 500 fell 1.33%, the Dow gave back 1.26%, and the NASDAQ dropped 2.37%. Internationally, the MSCI EAFE declined 1.10%.

Friday also marked Q2’s last trading day. The U.S. economy remains strong thanks to low unemployment numbers and strong corporate earnings. Meanwhile, on Thursday, the Fed announced that all but one bank passed stress tests evaluating their ability to weather a financial downturn.

This week, we’ll address President Trump’s proposed tariffs on international imports and their effect on stock performance.

The Breakdown: Global Trade Concerns

President Trump maintains that China and other countries have consistently practiced unfair trade tactics and imposed large tariffs on U.S. exports. In response, the White House has proposed …

The Weekly Update

Week of June 25, 2018
By Christopher T. Much, CFP®, AIF®

Stocks stumbled across the globe last week as trade tensions continued to escalate. Despite rebounding somewhat on Friday, the S&P 500 experienced its first weekly loss in a month, and the Dow posted its worst week since March. The S&P 500 dropped 0.89%, the Dow lost 2.03%, and the NASDAQ fell 0.69%. International stocks in the MSCI EAFE gave back 0.98%.

While trade headlines may affect market performance, a closer look at the data shows other, more powerful drivers affecting equity prices. In particular, many investors continue to focus on corporate earnings estimates.

Analyzing Corporate Earnings
Strong corporate earnings have helped maintain a sense of market balance in 2018. As the media focuses on political stories, corporate earnings estimates continue to rise—and have a greater market affect than many investors may recognize.

How Corporate Earnings Estimates Work
Many financial services companies hire …

The Weekly Update

Week of June 18, 2018
By Christopher T. Much, CFP®, AIF®

Last week stocks showed mixed results as political headlines continued to dominate the news. The Dow lost 0.89% and the S&P 500 was almost flat with a 0.02% gain. The NASDAQ, on the other hand, reached a record high on Thursday and ended the week up 1.32%. Both the S&P 500 and NASDAQ experienced their 4th week of gains in a row. International stocks in the MSCI EAFE lost ground, posting a 0.52% decline.

Two Key Perspectives from Last Week

1. Trade tension continued.
Spats with U.S. allies—including Canada—and ongoing threats of a trade war with China captured investors’ attention last week. On Friday, equities briefly stumbled when the U.S. pledged new tariffs on Chinese goods, and China responded by promising the same level of tariffs on the U.S. A true trade war could slow global economic growth, but the …

The Weekly Update

Week of June 11, 2018
By Christopher T. Much, CFP®, AIF®

As last week ended, tension between the U.S. and some of its greatest allies was on the rise. Trade remained a hot-button topic ahead of the G-7 meeting in Canada, but investors seemed largely unfazed by the drama. In fact, all 3 domestic indexes posted strong results: The S&P 500 added 1.62% and the NASDAQ gained 1.21%, with both indexes notching their 3rd week of gains in a row. The Dow ended Friday up 2.77% for the week—recording both its highest level and largest weekly gain since March. International stocks were also up, with the MSCI EAFE increasing by 0.91%.

While geopolitical headlines keep unfolding, new data continues to indicate that the U.S. economy is on solid ground. Let’s examine a few updates we received last week:

1. The trade deficit decreased in April.
The latest trade data was largely …