Stocks continued higher last week, as the S&P 500 rose by 0.8 percent to 2,840.4. That solid gain left the benchmark index up 6.2 percent year-to-date, and just 1.1 percent below the record close. As for performance during the month of July, the S&P 500 experienced some wild swings (spikes in volatility) but still managed to post a 3.6 percent gain, the largest increase since January. Participants in tax-advantaged 401(k) plans also appear to have fared well in July, 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 4.3 percent last month, more than double June’s 1.9 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 151.0 percent, while the S&P 500 has gained 37.8 percent (through the end of July 2018). Older workers (55-64) with at least five years of tenure saw their 401(k) balances rise by an average of “only” 46.7 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 week, the positives included that pending home sales rebounded, income growth firmed, corporate layoff announcements decreased, small business job creation picked up, measures of unemployment and underemployment fell, initial jobless claims held near a half-century low, Americans’ confidence in the economy improved, consumer spending rose for the fourth month in a row, and household inflation pressures cooled, albeit slightly. As for the negatives, the nation’s trade deficit widened, mortgage applications declined, construction spending unexpectedly fell, gauges of both manufacturing and services sector activity continued to send mixed signals, nonfarm payrolls growth moderated, and total employment costs for U.S. businesses rose at the fastest annual pace in a decade (driven by benefits). This week the pace of economic data slows down considerably but there are still a few important reports on inflation and the labor market scheduled to be released.
**A more detailed snapshot of the U.S. economy can be found here.**
What To Watch:
- MBA Mortgage Applications 7:00 AM ET
- Tom Barkin Speaks 8:45 AM ET
- EIA Petroleum Status Report 10:30 AM ET
- 10-Yr Note Auction 1:00 PM ET
- Jobless Claims 8:30 AM ET
- PPI-FD 8:30 AM ET
- Charles Evans Speaks 9:30 AM ET
- Wholesale Trade 10:00 AM ET
- EIA Natural Gas Report 10:30 AM ET
- 30-Yr Bond Auction 1:00 PM ET
Sources: Econoday, EBRI, FRBSL
Post author: Charles Couch