Weekly Update

The Weekly Update

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

Markets were closed on March 30 for Good Friday, but in the four days of trading, stocks recovered some of this year’s losses. For the week, the S&P 500 added 2.09%, the Dow gained 2.67%, and the NASDAQ increased by 1.03%. International stocks in the MSCI EAFE grew 0.81%.

Last week also marked the end of the year’s 1st quarter. Our next market update will share a recap of key performance details and events from January through March.

In this report, we will consider findings from last week and offer some perspective on the data.

What We Learned Last Week

• The Economy Expanded More Than Thought
  We received the final reading of 4th quarter 2017 Gross Domestic Product (GDP), and the numbers were higher than expected. Between October and December last year, GDP grew at a 2.9% annualized rate. In particular, …

The Weekly Update

Week of March 26, 2018
By Christopher T. Much, CFP®, AIF®

Markets experienced significant declines last week. The S&P 500 lost 5.95%, the Dow dropped 5.66%, and the NASDAQ declined 6.54%. With these losses, all 3 domestic indexes had their worst weekly performance in more than 2 years. International stocks also declined, with the MSCI EAFE giving back 2.64%.

What caused markets to stumble in this way? While various economic reports came out and the Federal Reserve raised rates again, another topic triggered the declines: trade war concerns.

Weekly Focus: Analyzing Tariffs and Trade Wars

What happened?

Last week, President Trump approved new tariffs on China as a punishment for taking American intellectual property. The tariffs could affect as much as $60 billion in Chinese imports—and Trump called this the “first of many” trade actions against the country.

China indicated that it may retaliate and is “looking at all options” on how to …

The Weekly Update

Week of March 19, 2018
By Christopher T. Much, CFP®, AIF®

Markets were up on Friday, but domestic stocks lost ground for the week as political turmoil and potential trade wars weighed on investors’ minds. The S&P 500 dropped 1.24%, the Dow gave back 1.54%, and the NASDAQ decreased 1.04%. International stocks in the MSCI EAFE barely avoided losses with a 0.13% gain.

1. Mixed Performance Results

Overall, we received a variety of mixed data last week:

• Down
  • Housing starts missed expectations and fell 7%.
  • Retail sales were lower than expected.
• Up
  • Consumer sentiment hit its highest reading since 2004.
  • Domestic factory production beat expectations.

But data reports were not the only detail worth noting last week. We also marked the 10-year anniversary of Bear Stearns’ collapse.

2. A Look Back

For 85 years, Bear Stearns was a respected institution that became one of the world’s largest investment banks. When the housing market …

The Weekly Update

Week of March 12, 2018
By Christopher T. Much, CFP®, AIF®

Domestic stocks leapt ahead last week as the latest jobs report inspired renewed confidence in our economic standing. The S&P 500 added 3.54%, and the Dow gained 3.25%. The NASDAQ erased its losses from February’s market correction to hit a new record close while growing 4.17% for the week. International stocks in the MSCI EAFE increased by 1.79%.

In addition to solid stock growth, Friday, March 9, also brought a significant milestone in the markets: the 9th anniversary of our current bull market. The Dow is now amid its longest-ever bull run, and the S&P 500’s bull market is its 2nd-longest and -largest ever.

To put the recovery in perspective, 9 years ago, the S&P 500 closed at only 676.53. By market’s close last Friday, the index was at 2,786.57—more than 4 times its value at the bull market’s …

The Weekly Update

Week of March 5, 2018
By Christopher T. Much, CFP®, AIF®

Volatility continued last week as markets posted their 1st weekly loss in 3 weeks. Despite some recovery on Friday, the S&P 500 dropped 2.04%, the NASDAQ slipped 1.12%, and the Dow lost 3.05% for the week. Internationally, the MSCI EAFE fell 2.91%.

Last week’s ups and downs began with continued questions over whether the Fed will raise interest rates. By the week’s end, however, rumors of an international trade war dominated the attention of investors.

Fed Suggests Raising Interest Rates

New Fed Chair Jerome Powell testified on Tuesday that inflation and a strong economy may lead to interest rate hikes sooner than expected. Whether the Fed will impose a 4th hike this year caused investor uncertainty and led to mid-week market drops. Powell noted, however, that increased market volatility will not influence the Fed’s decisions regarding rate increases.

Trump Announces Tariffs …

The Weekly Update

Week of February 26, 2018
By Christopher T. Much, CFP®, AIF®

Last week, the Presidents’ Day holiday meant markets were only open for 4 trading days, and during that time, we received comparatively few economic reports. Nonetheless, major domestic indexes showed considerable volatility and posted losses for 3 straight days. By Friday, however, stocks rebounded and ended the week in positive territory. For the week, the S&P 500 gained 0.55%, the Dow added 0.36%, and the NASDAQ was up 1.35%. International stocks in the MSCI EAFE lost ground, dropping 0.50%.

What drove market performance last week?

Once again, inflation and interest rates were on many investors’ minds. In particular, multiple reports from the Federal Reserve contributed to performance.

On Wednesday, the Fed released minutes from its January meeting, which indicated that officials had concerns about inflation. The minutes revealed that between rising inflation and economic growth, the Fed sees justification for …

The Weekly Update

Week of February 20, 2018
By Christopher T. Much, CFP®, AIF®

Markets rebounded last week, posting sizable gains and moving back into positive territory for the year. All three domestic indexes experienced their largest weekly growth in years, despite losing some ground on Friday after news of additional indictments in the Russia investigation.

By markets’ close on February 16, the S&P 500 added 4.30%, the Dow was up 4.25%, and the NASDAQ increased 5.31%. International stocks in the MSCI EAFE also gained 4.18% for the week.

This performance, however, did not come from simple, straightforward increases. Instead, the volatility from recent weeks continued. In fact, the S&P 500 lost or gained at least 1% on 8 of the past 10 trading days. The index only experienced that movement level 8 times throughout 2017.

Key Economic Findings

We received a wealth of data last week, and the readings helped deepen our understanding of …

The Weekly Update

Week of February 12, 2018
By Christopher T. Much, CFP®, AIF®

After months of relative calm, market fluctuations are causing many investors to wonder what is happening to the economy. Last week, the S&P 500 lost 5.16%, the Dow dropped 5.21%, and the NASDAQ declined 5.06%. The MSCI EAFE also gave back 6.19%. These losses pushed all four indexes into negative territory for the year. In addition, the weekly performance included significant volatility, as stocks had large fluctuations both within days and from one day to the next. The Dow, for example, lost over 1000 points twice during the week—and twice gained over 300 points.

During times like these, viewing events in their proper context is imperative. This week, we are going beyond our typical market update to provide you with clarity and perspective.

Our Analysis of the Recent Market Turbulence
The markets started 2018 with the wind in their sails, …

The Weekly Update

Week of February 5, 2018
By Christopher T. Much, CFP®, AIF®

After 4 straight weeks of gains, the markets have slipped. As of Friday, the S&P 500 lost 3.85%, the Dow dropped 4.12%, and the NASDAQ decreased by 3.53%. International stocks in the MSCI EAFE also took a 2.78% hit. Domestically, the losses spanned sectors and asset classes. For the S&P 500, all 11 of the index’s industries lost ground last week. This decline came after the S&P 500 had its best January performance in over 20 years.

So, what happened?

Looking at the markets’ sizable losses, you might expect that discouraging economic data came out last week—or some geopolitical drama spooked investors. On the contrary, the drops came in response to news that seems positive on the surface: Job and wage growth are picking up.

Reviewing the Jobs Report
On Friday, the Bureau of Labor Statistics reported that we added 200,000 …

The Weekly Update

Week of January 29, 2018
By Christopher T. Much, CFP®, AIF®

Stocks had an impressive week yet again, as each of the domestic indexes reached record highs and gained at least 2%. The S&P 500 added 2.23%, the Dow increased 2.09%, and the NASDAQ grew 2.31%. International stocks in the MSCI EAFE joined the growth, adding 1.49%.

On Monday, January 22, the government shutdown ended after 3 days, as House and Senate members reached an initial compromise. President Trump signed the measure on Monday evening, securing government funding until February 8.

With the funding discussion set aside for the next week or so, we believe 3 topics were of particular interest for the markets:

1. Corporate earnings
2. Global growth
3. Gross domestic product (GDP) readings

1. Corporate Earnings
We are in the middle of the best corporate earnings season in 5 years. So far, 80% of S&P 500 companies that released 4th-quarter data have …