Markets, Economy

Weekly Kickstart (03/13/2017-03/17/2017)

3/13/17 8:00 AM

/iStock-462756183.jpgThe market melt-up took a pause last week, with the S&P 500 falling by 0.44 percent to 2,372.60. That was the first weekly decline since mid-January but the benchmark index is still up 5.97 percent year-to-date, and just 0.97 percent below its all-time closing high. One thing weighing on the market last week was the price of oil, which fell below $50 per barrel for the first time since December and pulled down most stocks in the energy sector. The weakness resulted from new supply data which showed that U.S. crude stockpiles had increased for nine weeks in a row, helped by the continued rebound in the number of operating oil rigs. Another headwind for equities was the recent deluge of hawkish rhetoric from officials at the Federal Reserve (Fed), which market-implied pricing suggests has made an interest rate hike at this week’s Federal Open Market Committee (FOMC) meeting almost certain.

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With equities still near record highs, though, it appears that the market is for now not too concerned about a rising rates environment. One reason for this could be that investors remain confident that any negative spillovers from higher borrowing costs can be offset by the broad improvements in the economy expected to result from the tax cuts, deregulation, and other pro-growth policies anticipated under the new administration. Corporate earnings, and in turn stock valuations, should also benefit from an improving economic backdrop. However, the timetable for all of these issues remains quite uncertain. That is why retirement investors should focus less on near-term developments and more on the long-term goal of amassing wealth. This involves years of participation in the highly resilient stock market, which can be helped by 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 week, the positives included that mortgage and refinance applications rose, factory orders increased, private-sector hiring improved, corporate layoff announcements declined, small business job creation jumped, nonfarm payrolls growth firmed, and the government’s estimates of both unemployment and underemployment fell. As for the negatives, the nation’s trade deficit widened, trade-related inflation pressures firmed, the 30-year mortgage rate spiked to a new 2017-to-date high, consumer credit growth slowed considerably, initial jobless claims rose, unit labor costs increased, hourly wage growth disappointed estimates, and nonfarm productivity grew by less than expected in the fourth quarter of 2016. This week the pace of economic data picks up slightly, with important reports on manufacturing, housing, employment, consumers, retail sales, and inflation scheduled to be released, along with the latest reading on small business owner optimism from the National Federation of Independent Business (NFIB) due out tomorrow morning.

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

What To Watch:

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Sources: Econoday, Twitter, Bloomberg, Goldman Sachs, Wells Fargo, FRBG

Post author: Charles Couch

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