Markets, Economy

Weekly Kickstart (01/03/2017-01/06/2017)

1/3/17 8:00 AM

iStock_000000499785_Small-1Stocks headed lower last week, with the S&P 500 falling by 1.10 percent to 2,238.83. This was the largest weekly decline for the benchmark index since before the election but the S&P 500 still ended the month of December with a healthy 1.82 percent gain. More importantly, last month’s strong performance helped the S&P 500 finish 2016 up 9.54 percent, its fourth annual increase in the past five years. Looking ahead, stocks have historically performed well in January but some investors are concerned that the market may be in store for a correction because there has yet to be any meaningful pullback (profit taking) following the post-election run-up in equites. Further, there are many unanswered questions that could prove to have a big impact on stocks in 2017, e.g. will the incoming administration enact major tax-related legislation, will the housing recovery continue, will wage growth accelerate, will inflation reach the Fed’s 2% target, will the Fed hike rates faster than implied by current market pricing, etc. All of this uncertainty means that volatility could pick up in the near-term. For retirement investors, though, the focus should remain on the long-term goal of building wealth through consistent participation in the highly resilient stock market. Such efforts can be enhanced with the use of tax-advantaged savings vehicles, dollar-cost averaging, and regularly consulting with a professional financial advisor. As always, we are here to help with any questions you may have.

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To recap a few of the things we learned about the economy last week, the positives included that regional manufacturing activity continued to rebound, consumer confidence surged, and the number of Americans making first-time claims for unemployment benefits fell. As for the negatives, the nation’s trade deficit in goods widened sharply, pending home sales unexpectedly declined, housing inflation intensified, and continuing jobless claims spiked. Despite this being a holiday-shortened week, the pace of economic data still picks up, with lots of important reports on manufacturing, housing, services sector activity, and employment scheduled to be released. This includes the potentially market-moving minutes from the latest Federal Open Market Committee (FOMC) meeting on Wednesday and the December job report from the Bureau of Labor Statistics (BLS) due out this Friday.

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A more detailed snapshot of the U.S. economy can be found here.

What To Watch:

Monday

  • US Holiday: New Year's Day (Obs)
  • All Markets Closed

Tuesday

Wednesday

Thursday

Friday

  


 

Sources: Econoday, Twitter, Bloomberg, Advisor Perspectives, ZH, Goldman Sachs

Post author: Charles Couch

Disclosures