Markets, Economy

Weekly Kickstart (01/08/2018-01/12/2018)

1/8/18 8:00 AM

/iStock-456509341.jpgThe market melt-up resumed last week, as the S&P 500 jumped by 2.60 percent to 2,743.15, a new all-time closing high. Investor optimism also continued to improve last week, according to a new AAII poll. Specifically, 59.8 percent of surveyed U.S. investors said that they expect stock prices will rise over the next six months, up 7.1 percentage points from the prior week and the highest reading since December 2010. At the same time, bearish sentiment is at its lowest level in more than three years, and the CBOE’s VIX volatility index, often referred to as “investors’ fear gauge,” is just about as low as it has ever been.

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Some traders worry that all of this means there is excessive complacency in the market, while other investors are more concerned about missing out on yet another leg higher in equities. Ultimately, though, predicting where stocks will head over a short time horizon is difficult if not impossible. That is why retirement investors should stay focused on the long-term and understand that selloffs in the market are far from uncommon. In fact, the S&P 500 since 1980 has experienced an average intra-year drawdown of 13.8 percent but still posted a positive annual return for 29 of the past 38 years. It is even possible to capitalize on some pullbacks in the market, especially for investors that utilize dollar-cost averaging and regularly consult with a professional financial advisor. As always, we are here to help with any questions you may have.


To recap a few of the things we learned about the economy last holiday-shortened week, the positives included that manufacturing activity expanded, factory orders rebounded, construction spending rose, motor vehicle sales increased, small business job creation jumped, corporate layoff announcements declined, and wage growth firmed. As for the negatives, mortgage applications fell, services sector activity cooled, initial jobless claims unexpectedly rose, and total nonfarm payrolls in America increased by less than forecast. This week the pace of economic data remains elevated with several important reports on consumers, credit, employment, small business, and inflation scheduled to be released, along with a handful of speeches from Federal Open Market Committee (FOMC) members.


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

What To Watch:








Sources: Econoday, American Association of Individual Investors, J.P. Morgan

Post author: Charles Couch