The market melt-up continued last week, as the S&P 500 rose by 0.3 percent to 2,587.84. That is another new all-time closing high which left the benchmark index up a solid 15.6 percent year-to-date. As for performance during the month of October, the S&P 500 experienced a few scares (spikes in volatility) but still managed to post a 2.2 percent gain, the 8th monthly increase in a row. Participants in tax-advantaged 401(k) plans also fared well in October, according to new 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 3.2 percent last month, while older workers (55-64) with more than 20 years of tenure saw their 401(k) balances rise by an average of 1.8 percent.
Even more impressive is that since the start of 2015, the average 401(k) account balance for younger, less-tenured workers has surged by 151.5 percent, while the S&P 500 has gained just 25.1 percent (through the end of October 2017). Older, more-tenured workers saw their 401(k) balances rise by an average of “only” 31.3 percent during this same period, not surprising since these individuals tend to have much larger accounts that are less sensitive to both contribution flows 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 significant 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 gauges of both manufacturing and services sector activity improved, construction spending increased, consumer confidence firmed, personal spending rose, productivity growth doubled, small business hiring rebounded, corporate layoff announcements declined, initial jobless claims continued to retreat from the hurricane-related spike, nonfarm payrolls jumped, and the rates of both unemployment and underemployment in America fell to new cycle lows. As for the negatives, mortgage and refinance applications slid, the personal savings rate declined, employers’ compensation costs increased, housing inflation remained elevated, and average hourly earnings rose by less than anticipated. This week the pace of economic data slows down considerably but there are still a few important reports on consumers, employment, and small business scheduled to be released.
**A more detailed snapshot of the U.S. economy can be found here.**
What To Watch:
- William Dudley Speaks 12:10 PM ET
- NFIB Small Business Optimism Index 6:00 AM ET
- JOLTS 10:00 AM ET
- 3-Yr Note Auction 1:00 PM ET
- Consumer Credit 3:00 PM ET
- MBA Mortgage Applications 7:00 AM ET
- EIA Petroleum Status Report 10:30 AM ET
- 10-Yr Note Auction 1:00 PM ET
- Jobless Claims 8:30 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