Markets, Economy

Weekly Kickstart (05/06/2019-05/10/2019)

5/6/19 8:00 AM

iStock-626627280.jpgStocks edged higher last week, as the S&P 500 lifted by 0.20 percent to 2,945.64. That left the benchmark index up 17.50 percent 2019-to-date, and just 0.01 percent below the all-time closing high. Any pullback in the near-term should not be too surprising since some traders are likely eager for excuses to take profits (sell) after the market’s latest return to record levels. Although ignored for now, one such excuse was perhaps provided by the Federal Reserve last Wednesday when monetary policymakers’ reiterated their “patient” outlook but at the same time upgraded their assessment of the economy, in turn dampening expectations for an interest rate cut occurring any time soon. Some traders might also opt to lighten their exposure as we enter the “sell in May and go away” period. However, even though it is true that equities have historically performed better in the winter months, seasonality still favors being long during the summer over being short.

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As for performance during the month of April, the S&P 500 rose by 3.93 percent, the 4th increase in a row and the largest since January. Participants in tax-advantaged 401(k) plans also fared well in April, according to updated EBRI data. For example, the average 401(k) account balance for younger (25-34), less-tenured (1-4 years) workers rose by 4.3 percent last month, building on the first quarter’s 15.3 percent gain. Even more impressive is that since the end of 2016, the average 401(k) account balance for younger, less-tenured workers has surged by 125 percent, while the S&P 500 has gained just 32 percent (through the end of April 2019). Older workers (55-64) with at least five years of tenure saw their 401(k) balances rise by an average of “only” 41 percent during this same period, not surprising since these individuals tend to have much larger accounts that are less sensitive to both contributions and market fluctuations. More importantly, these substantial gains should provide further evidence of how effective consistent participation in a tax-advantaged savings vehicle can be when trying to amass a large retirement nest egg. Additional assistance is available through the use of 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 home prices rose at a slower rate, pending home sales rebounded, consumer confidence jumped, Americans’ personal spending picked up, productivity growth in the first quarter of 2019 surged, the Fed’s preferred inflation measure cooled, small business job creation improved, corporate layoff announcements decreased, nonfarm payrolls growth increased, and the unemployment rate fell to a near-half-century low. As for the negatives, the nation’s trade deficit (in goods) widened, mortgage applications fell, wage growth disappointed forecasts, construction spending declined, and gauges of both manufacturing and service sector activity generally deteriorated. This week the pace of economic data slows down considerably but there are still a few important reports on consumers, inflation, and employment scheduled to be released, along with a handful of speeches from Federal Reserve officials.

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

What To Watch:

Monday

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Wednesday

Thursday

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Sources: Econoday, FRBG, Twitter, EBRI, FRBSL

Post author: Charles Couch

Disclosures