Markets, Economy

Weekly Kickstart (01/09/2017-01/13/2017)

1/9/17 8:00 AM

/iStock-532854850.jpgStocks headed higher last week, with the S&P 500 rising by 1.70 percent to 2,276.98, a new record close for the benchmark index. This was an encouraging start to 2017, especially following a solid 1.82 percent gain in December, and a 9.54 percent increase over the past twelve months. The latest rally in the market has also benefited 401(k) participants, according to new data from the Employee Benefit Research Institute (EBRI). Specifically, the mean 401(k) account balance for younger (25-34), less-tenured (1-4 years) workers rose by 3.3 percent in December, and 32.3 percent over the past twelve months. Older (55-64) employees with longer-tenures (20-29 years) experienced a 1.5 percent increase on average last month, and a 10.9 percent gain over the course of 2016.


There were lots of headlines for traders to digest last week, including mixed economic data and several geopolitical developments. Another major issue that investors were paying close attention to last week was Wednesday’s release of the minutes from the December Federal Open Market Committee (FOMC) meeting. Indeed, President-elect Donald Trump was not explicitly mentioned during last month’s meeting but almost every Fed official indicated that the prospects for expansionary fiscal policies under the incoming Congress and Administration could have an effect on the committee’s pace of interest rate normalization going forward. However, officials stressed that there is still “considerable uncertainty about the timing, size and composition of any future fiscal and other economic policy initiatives as well as about how those policies might affect aggregate demand and supply.” Such uncertainty among Fed officials could lead to an uptick in volatility in the broader market. For retirement investors, though, the focus should be less on the near-term path of monetary policy and more on the long-term goal of building wealth through consistent participation in the highly resilient stock market. Such efforts can be enhanced with the use of tax-advantaged savings vehicles, 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 (holiday-shortened) week, the positives included that national gauges of U.S. manufacturing activity improved, construction spending rebounded, wage growth accelerated, labor force participation edged higher, the rate of underemployment fell to a new recovery low, and the number of Americans making first-time claims for unemployment benefits declined. As for the negatives, mortgage and refinance applications plunged, the nation's trade deficit widened sharply, services sector activity expanded at a slower rate, factory orders declined, corporate layoff announcements rose, private-sector payroll growth moderated, small business job creation continued to weaken, the unemployment rate ticked higher, and Americans’ confidence in the labor market softened. This week the pace of economic data slows down but there are still several important reports on retail sales, inflation, employment, and consumers scheduled to be released, along with the latest update on small business owner confidence 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.

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Sources: Econoday, Twitter, Bloomberg, Advisor Perspectives, FRBG, FRBSL

Post author: Charles Couch