Markets, Economy

Weekly Kickstart (07/09/2018-07/13/2018)

7/9/18 8:00 AM

IMAGEStocks rebounded last week, as the S&P 500 rose by 1.52 percent to 2,759.82. That solid gain left the benchmark index up 3.22 percent year-to-date, and just 3.94 percent below the record close. It was not a smooth ride higher for equities, though, as the S&P 500 last week was at one point down 0.71 percent before the bulls were able to regain control. Trading volumes were lower than normal during this period due to the Independence Day holiday, which likely exacerbated the wild intraday swings in the market. However, volatility has already been trending higher lately due to a hawkish Fed, U.S. trade policy uncertainty, and various other factors. Many investors have taken notice of this development, according to a new Gallup and Wells Fargo poll.

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Specifically, 44 percent of surveyed U.S. investors said that they feel “somewhat concerned” about recent stock volatility, and 11 percent described themselves as “very concerned.” Sixty-two percent of respondents added that market fluctuations have caused them to “pay closer attention to their investments” this year, and nearly half (46 percent) admitted that they have kept a large portion of their money on the sidelines (in cash) due to volatility. Such cautiousness is likely not going away any time soon because 81 percent of respondents said that they expect volatility to remain elevated throughout 2018, and 65 percent even fear the “worst is [still] ahead of us.” On the bright side, 95 percent of respondents said that they “maintain their cool when investing even when the market is volatile,” and the same percentage reported that “they are in the market for the long haul regardless of the ups and downs.” Erik Davidson, chief investment officer for Wells Fargo Private Bank, added that “Investors reasonably expect increased market turbulence going forward. Nevertheless, in their own minds they are ready for it and have every intention to ride it out, recognizing the wisdom of a long-term approach to investing.”

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To recap a few of the things we learned about the economy last (holiday-shortened) week, the positives included that the nation’s trade deficit narrowed, motor vehicle sales picked up, construction spending rose, factory orders increased, services sector activity firmed, and nonfarm payrolls grew in America for the 93rd month in a row. As for the negatives, mortgage and refinance applications fell, corporate layoff announcements increased, initial jobless claims rose for the second week in a row, small business job creation continued to cool, the unemployment rate jumped, wage growth moderated, and gauges of national manufacturing activity continued to send mixed signals. This week the pace of economic data remains slow but there are still a few important reports on consumers, small business, employment, and inflation scheduled to be released.

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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, Gallup, Wells Fargo, FRBSL

Post author: Charles Couch

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