Stocks continued higher last week, with the S&P 500 rising by 1.41 percent to 2,459.27. That is a new all-time closing high and leaves the benchmark index with a solid 9.85 percent year-to-date gain. Despite the strong performance, the price action in both the equity and bond markets was actually quite choppy during the past five trading sessions, as investors had a deluge of economic data and other headlines to react to. Uncertainty also continued to build around the Federal Reserve’s timetable for monetary policy adjustments in the second half of 2017. For example, there were a handful of speeches by members of the Federal Open Market Committee (FOMC) last week, including Fed Chair Janet Yellen’s semiannual testimony before Congress.
The overall message from officials was that the committee would like to proceed with additional interest rate hikes and begin the process of shrinking the Fed’s balance sheet this year, should economic activity continue to warrant such action. That criterion has been a big factor behind investor uncertainty lately as incoming data suggest that the second quarter’s economic rebound might have been a lot weaker than previously anticipated. Altogether, it appears that most traders are now trying to decide what is better for equities: faster gross domestic product (GDP) growth or interest rates remaining low. The answer to that question will probably vary from person to person depending on their unique investment time horizon. More importantly, retirement-focused investors with confidence in the long-term resiliency of the stock market can better navigate this environment by regularly consulting with a professional financial advisor. Additional assistance is available through dollar-cost averaging and the consistent use of tax-advantaged savings vehicles. 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 week, the positives included that the approval rate for small business loan applications rose, consumer credit rebounded, initial jobless claims slid, industrial production increased, capacity utilization improved, and both household and wholesale inflation pressures in America remained muted. As for the negatives, mortgage and refinance applications decreased, the total number of job openings in America fell, retail sales declined, small business owner optimism cooled, and consumer confidence moderated. This week the pace of economic data slows down considerably but there are still a few important reports on manufacturing and housing scheduled to be released.
**A more detailed snapshot of the U.S. economy can be found here.**
What To Watch:
- Empire State Mfg Survey 8:30 AM ET
- MBA Mortgage Applications 7:00 AM ET
- Housing Starts 8:30 AM ET
- EIA Petroleum Status Report 10:30 AM ET
- Jobless Claims 8:30 AM ET
- Philadelphia Fed Business Outlook Survey 8:30 AM ET
- Bloomberg Consumer Comfort Index 9:45 AM ET
- Leading Indicators 10:00 AM ET
- EIA Natural Gas Report 10:30 AM ET
- 10-Yr TIPS Auction 1:00 PM ET
- Baker-Hughes Rig Count 1:00 PM ET
Sources: Econoday, FRBG, Wells Fargo, FRBSL
Post author: Charles Couch