Markets, Economy

Weekly Kickstart (08/14/2017-08/18/2017)

8/14/17 8:00 AM

iStock-456509341.jpgThe market melt-up came to a sudden halt last week, as the S&P 500 fell by 1.43 percent to 2,441.32. That is the largest 5-day decline for the benchmark index since March but the S&P 500 is still up 9.04 percent year-to-date, and just 1.60 percent below the all-time closing high. Stocks actually started last week on a positive note, with the S&P 500 rising to a record level on Monday. However, sellers quickly rushed in as tensions between the United States and North Korea intensified. Most traders are hopeful that this geopolitical conflict will turn out to have been nothing more than a bit of saber-rattling which provided market participants with an excuse to take profits and reenter at more favorable prices.

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Speaking of profits, 91 percent of the companies listed on the S&P 500 have already reported their second quarter earnings results, and 73 percent of these firms have beat their average earnings per share (EPS) estimate, according to new FactSet data. That is above the 5-year average and companies in aggregate are reporting earnings that are 6.1 percent above estimates. Ten sectors are reporting year-over-year earnings growth, with the Energy, Information Technology, Utilities, and Financials sectors leading the way. The only sector reporting a year-over-year decline in earnings is the Consumer Discretionary sector. Altogether it appears that most companies continue to find a way to boost profitability even as overall economic growth remains good but not great. This contributes to the long-term resiliency of the stock market, which in turn enables investors to amass significant wealth through consistent participation. 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.

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To recap a few of the things we learned about the economy last week, the positives included that the number of job openings in America jumped to an all-time high, productivity growth rebounded, small business owner optimism surged, and both household and wholesale inflation pressures in the U.S. continued to soften. As for the negatives, consumer credit growth cooled, the number of unemployed Americans per job opening ticked higher, the ratio of quits to layoffs and discharges fell slightly, and initial jobless claims rose. This week the pace of economic data slows down but there are still a few important reports on manufacturing, housing, employment, and consumers scheduled to be released, along with the potentially market-moving minutes from the latest Federal Open Market Committee (FOMC) meeting due out on Wednesday.

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

What To Watch:

Monday

  • Nothing significant

Tuesday

Wednesday

Thursday

Friday

  


 

Sources: Econoday, FactSet, FRBSL

Post author: Charles Couch

Disclosures