Markets, Economy

Weekly Kickstart (02/27/2017-03/03/2017)

2/27/17 8:00 AM

/iStock-456509341.jpgThe market melt-up continued last week, with the S&P 500 rising by 0.69 percent to 2,367.34. That was another new all-time closing high for the benchmark index, which is now up 5.74 percent year-to-date, a solid start to 2017. Other major stock indices also rose to fresh all-time highs last week, including the Dow Jones Industrial Average (DJIA), which has closed at a record level for eleven days in a row. There were a few attempts to end the market’s winning streak last week but every time the bulls quickly reasserted their control. In fact, the S&P 500 has now gone 48 trading sessions without an intraday move of at least 1 percent, the most tranquil period for stocks ever. Although more investors are growing concerned as equities continue to levitate to new highs, the current uptrend seems unlikely to end until a clear catalyst (excuse) for a selloff presents itself.

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There was a relative dearth of economic data for traders to digest last week but one headline that did catch the market’s attention, albeit briefly, was the release of the minutes from the January Federal Open Market Committee (FOMC) meeting. Indeed, officials continued to express confidence in the economy, with “many participants” even suggesting that it could be appropriate to raise the federal funds rate again “fairly soon.” However, some participants also commented that “the recent increase in equity prices might in part reflect investors’ anticipation of a boost to earnings from a cut in corporate taxes or more expansionary fiscal policy, which might not materialize,” and that “the low level of implied volatility in equity markets appeared inconsistent with the considerable uncertainty attending the outlook for such policy initiatives.”

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Some traders interpret the increased willingness of Fed officials to opine on low market volatility and uncertainty surrounding the White House’s pro-growth policies as a sign that the committee is looking for excuses to move as slow as possible with additional rate hikes. That assessment is somewhat supported by the continued drift lower in U.S. Treasury yields seen during the past few days following the release of the FOMC minutes. Regardless, retirement investors should focus less on the near-term path of monetary policy and more on the long-term goal of amassing wealth. Such efforts can be enhanced with the consistent 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 (holiday-shortened) week, the positives included that existing home sales rose, manufacturing activity in the Midwest region of the country improved, and the 4-week average of initial jobless claims in America fell to a multi-decade low. As for the negatives, mortgage and refinance applications declined, new home sales lifted by less than expected, housing inflation firmed, and consumer sentiment eased for the first time since the election. This week the pace of economic data picks up, with lots of important reports on manufacturing, housing, services sector activity, and wage growth scheduled to be released. This week will also see the first revision to the government’s estimate of U.S. gross domestic product (GDP) growth during the fourth quarter of 2016, as well as the final update to the Fed’s preferred inflation gauge before the March FOMC meeting.

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

What To Watch:

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Sources: Econoday, Twitter, Advisor Perspectives, Pension Partners, FRBG

Post author: Charles Couch

Disclosures