Markets, Economy

Weekly Kickstart (07/03/2017-07/07/2017)

7/3/17 8:00 AM

/iStock-462756183.jpgStocks retreated last week, with the S&P 500 falling by 0.61 percent to 2,423.41. That small loss still left the benchmark index up a solid 8.24 percent 2017-to-date, and just 1.22 percent below the all-time closing high. Further, one should not read too heavily into last week’s selloff because it might have been exacerbated by month- and quarter-end rebalancing. Speaking of which, the S&P 500 lifted by 0.48 percent in June, its 3rd monthly gain in a row and the 7th increase in the past eight months. As for quarter-over-quarter performance, the benchmark index rose 2.57 percent in Q2, the smallest gain in a year but still the 7th consecutive quarterly increase. Looking ahead, stocks could continue to push higher in the second half of 2017, especially if meaningful progress is finally made in D.C. toward tax cuts and other pro-growth policies.

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Some traders, though, remain reluctant to add to their equity exposure right now because major indices are just fractionally off of record levels and stock market volatility has been unusually low this year. For example, in 2017 the S&P 500 has experienced its smallest intra-year drawdown during the first six months of a year since 1995. In fact, there have been only four daily moves in the S&P 500 of more than 1 percent (higher or lower) during the last six months, the fewest since 1964, and annualized volatility over the past year is basically as low as it has ever been. Even if volatility does pick up in the second half of 2017, it is important for regular investors to understand that selloffs are far from uncommon in the stock market. The S&P 500 since 1980, for instance, has experienced an average intra-year drawdown of 14.2 percent but still posted a positive annual return for 28 of the past 37 years. More importantly, retirement-focused investors can capitalize on this long-term resiliency 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 week, the positives included that the nation’s trade deficit narrowed, income growth firmed, initial jobless claims remained low, and gross domestic product (GDP) during the first quarter of 2017 expanded at a faster pace than previously estimated. As for the negatives, mortgage and refinance applications declined, pending home sales slid, demand for U.S.-manufactured durable goods softened, core capital expenditures fell, Q1 corporate profits growth was revised lower, gauges of regional business activity continued to send mixed signals, and consumer sentiment moderated. This holiday-shortened week the pace of economic data picks up slightly with several important reports on manufacturing, services sector activity, and employment scheduled to be released, including the latest monthly job report from the Bureau of Labor Statistics (BLS) on Friday. The potentially market-moving minutes from the most recent Federal Open Market Committee (FOMC) meeting will also be released this week on Wednesday.

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

What To Watch:

Monday

Tuesday

  • Independence Day
  • Markets Closed

Wednesday

Thursday

Friday

  


 

Sources: Econoday, Bloomberg, Twitter, Pension Partners, Advisor Perspectives, Wells Fargo, J.P. Morgan, FRBSL

Post author: Charles Couch

Disclosures