Stocks continued higher last week, as the S&P 500 rose by 0.5 percent to 2,734.6. That gain left the benchmark index up 2.3 percent year-to-date, and just 4.8 percent below the all-time closing high. As for performance during the month of May, the S&P 500 experienced some wild swings (spikes in volatility) but still managed to post a 2.2 percent gain, the largest increase since January. Participants in tax-advantaged 401(k) plans also appear to have fared well in May, according to updated data from the Employee Benefit Research Institute (EBRI). For example, the average 401(k) account balance for younger (25-34), less tenured (1-4 years) workers rose by 4.6 percent last month, up sharply from April’s 0.4 percent increase.
Even more impressive is that since the end of 2015, the average 401(k) account balance for younger, less-tenured workers has surged by 136.0 percent, while the S&P 500 has gained 32.4 percent (through the end of May 2018). Older workers (55-64) with more than 20 years of tenure saw their 401(k) balances rise by an average of “only” 33.0 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.
To recap a few of the things we learned about the economy last (holiday-shortened) week, the positives included that construction spending rebounded, gauges of both regional and national manufacturing activity improved, wage growth accelerated, consumer spending jumped, corporate layoffs decreased, nonfarm payrolls grew by more than forecast, initial jobless claims fell, and measures of both unemployment and underemployment in America slid to new cycle lows. As for the negatives, mortgage and refinance applications declined, pending home sales fell, small business job creation moderated, and U.S. gross domestic product (GDP) growth during the first quarter of 2018 was revised slightly lower. This week the pace of economic data slows down considerably but there are still a few important reports on employment, services sector activity, productivity, and consumers scheduled to be released.
**A more detailed snapshot of the U.S. economy can be found here.**
What To Watch:
- Factory Orders 10:00 AM ET
- MBA Mortgage Applications 7:00 AM ET
- International Trade 8:30 AM ET
- Productivity and Costs 8:30 AM ET
- EIA Petroleum Status Report 10:30 AM ET
- Jobless Claims 8:30 AM ET
- Quarterly Services Survey 10:00 AM ET
- EIA Natural Gas Report 10:30 AM ET
- 3-Yr Note Announcement 11:00 AM ET
- 10-Yr Note Announcement 11:00 AM ET
- 30-Yr Bond Announcement 11:00 AM ET
- Consumer Credit 3:00 PM ET
Sources: Econoday, EBRI, FRBSL
Post author: Charles Couch