Weekly Update

The Weekly Update

Week of April 23, 2018
By Christopher T. Much, CFP®, AIF®

Stocks posted moderate gains last week, as the S&P 500 added 0.52%, the Dow increased 0.42%, and the NASDAQ rose 0.56%. International stocks in the MSCI EAFE followed suit, gaining 0.41%.

We received numerous new data updates last week, and most provided positive news for the economy. Retail sales, housing starts, and industrial production all beat expectations and increased in March.

Amid last week’s primarily positive data updates, two key occurrences also affected markets:

1. Corporate earnings
2. Treasury yields

A Closer Look

1. Earnings Season Continued
As of April 20, about 16% of S&P 500 companies shared their results for the 1st quarter, and over 80% of them beat earnings expectations. However, this solid performance has yet to impress investors. While most companies have exceeded earnings projections, their stocks haven’t reflected the growth.

On the other hand, companies that have beaten their sales projections—but …

The Weekly Update

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

Market volatility continues. Stocks slid on Friday, April 13, but still held on to gains for the week. The S&P 500 increased 1.99%, the Dow added 1.79%, and the NASDAQ was up 2.77%. International stocks in the MSCI EAFE also rose, gaining 1.45%.

As in recent weeks, international events continued to sway markets: Concerns about trade disputes affected investor behavior. Meanwhile, escalating conflict in Syria may have weighed on people’s minds.

As we track these developments, we want to share insight about another important occurrence from last week: the beginning of corporate earnings season.

1st Quarter Corporate Earnings Season

1. Expectations remain very high
Analysts anticipate a particularly strong earnings season. Thomson Reuters data predicts that S&P 500 companies’ profits were 18.6% higher in the 1st quarter of 2018 than in 2017. If accurate, this increase would be the largest since 2011.

So …

The Weekly Update

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

Domestic stocks lost ground last week as trade war concerns continued to rattle investors. With these declines, the Dow officially moved back into correction territory. For the week, the S&P 500 lost 1.43%, the Dow dipped 0.95%, and the NASDAQ dropped 2.11%. International stocks in the MSCI EAFE managed a 0.38% increase.

An escalating trade dispute between the U.S. and China wasn’t the only headline to affect markets. Last week also brought surprising data from the Labor Department. In March, the economy added 103,000 new jobs—far lower than economists anticipated. Meanwhile, wages grew, and unemployment remained a low 4.1%.

We are now 1 week into the 2nd quarter of 2018. As we examine what may lie ahead in the markets, we will also focus on understanding what has happened so far this year. Here are a few key findings …

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 …