Markets, Economy

Weekly Kickstart (05/21/2018-05/25/2018)

5/21/18 8:00 AM

/iStock-462756183.jpgStocks were under pressure last week, as the S&P 500 fell by 0.54 percent to 2,712.97. That small loss still left the benchmark index up 1.47 percent year-to-date, and just 5.57 percent below the all-time closing high. The pullback might have simply been a bit of profit taking following the prior week’s 2.41 percent surge in the market, not too surprising as traders continue to weigh upbeat earnings and positive economic data with rapidly rising Treasury yields and global trade uncertainty. For many older Americans, though, it may be difficult to ignore the wild swings seen in the market this year. In fact, a new study by the Insured Retirement Institute and AXA Financial found that half of surveyed investors between the ages of 50 and 75 reported being “extremely concerned” about a stock market correction.

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Eighty-three percent of respondents also said that “not losing principal is extremely or very important,” and 59 percent reported that having a quarter of their assets currently invested in the stock market makes them uncomfortable. Such concerns are understandable given that participants in this particular survey are already retired or nearing retirement, and therefore will be more sensitive to drawdowns in the market than younger investors. However, the fear of loss and volatility can sometimes cause people of all ages to hold more of their retirement savings in cash and bonds than in stocks than would be optimal for their long-term financial goals. Fifty-five percent of surveyed Americans even acknowledged that “investment risk is necessary to achieve financial success,” and 92 percent said that they are aware that inflation will have an impact on their old-age expenses. Such responses provide more evidence of why investors should consult with a professional financial advisor to help make sure that they stay focused on the long-term, refrain from making emotion-based trading decisions, and maintain a portfolio that is appropriate for their unique risk tolerance, nearness to retirement, and old-age income needs.

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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 accelerated, industrial production firmed, capacity utilization rose, homebuilder sentiment improved, and retail sales continued to rebound. As for the negatives, mortgage and refinance applications declined, building permits slid, housing starts fell, and first-time claims for unemployment benefits rose by more than expected. This week the pace of economic data slows down even further but there are still a few important reports on manufacturing and housing scheduled to be released, along with a handful of speeches from officials at the Federal Reserve and the potentially market-moving minutes from the latest FOMC meeting.

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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, IRI, AXA, FRBSL

Post author: Charles Couch

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