Markets, Economy

Weekly Kickstart (09/11/2017-09/15/2017)

9/11/17 8:00 AM

/iStock-649016342.jpgThe market rebound came to a halt last week, as the S&P 500 fell by 0.61 percent to 2,461.43. That small loss still left the benchmark index up a healthy 9.94 percent year-to-date, and just 0.79 percent below the all-time closing high. Stocks gapped down on Tuesday and then traded in a narrow range for the rest of the week, with uncertainty being the main issue weighing on equities. The immediate threat of government shutdown, for instance, has been put off for at least a few more months as Congress passed a continuing resolution that funds the government and suspends the debt ceiling through December 8th. Although this should be a near-term positive for the market, many investors fear that at best the proverbial can has been kicked down the road and brinkmanship later this year is still a possibility.

45y53445y345.png 54454y5y4545.png

The deal struck in Washington last week also approves $15.3 billion in additional funding for the Federal Emergency Management Agency (FEMA) to help provide the aid that will be necessary for damages resulting from hurricanes Harvey and Irma. While it is still too early for a precise estimate, total losses associated with hurricane Harvey could be in the ballpark of $90 billion, according to Wells Fargo, and Irma’s financial impact may be even larger. A new research note from Bank of America Merrill Lynch added that “Natural disasters tend to reallocate growth, serving as a drag in the quarter when the disaster hits and a boost in later periods from rebuilding efforts. We estimate that Harvey will end up slicing 0.4 percentage points from Q3 GDP tracking, bringing our forecast to 2.5%. Hurricane Irma threatens to drag growth down further. Rebuilding is historically a long process, implying upside risks to growth early next year.”


To recap a few of the things we learned about the economy last week, the positives included that mortgage and refinance applications jumped, activity in the U.S. services sector improved, consumer credit utilization rebounded, and productivity growth during the second quarter of 2017 was revised higher. As for the negatives, the nation’s trade deficit widened, small business borrowing fell, factory orders declined, and first-time claims for unemployment benefits surged, although due mainly to a Harvey-related spike in Texas. This week the pace of economic data picks up slightly with several important reports on manufacturing, employment, consumers, and inflation scheduled to be released, along with the latest update on small business owner optimism from the National Federation of Independent Business (NFIB) due out tomorrow morning.


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

What To Watch:








Sources: Econoday, Advisor Perspectives, Wells Fargo, ZH, BofAML, FRBSL

Post author: Charles Couch