Markets, Economy

Weekly Kickstart (01/30/2017-02/03/2017)

1/30/17 8:00 AM

/iStock-522646895.jpgStocks rallied last week, with the S&P 500 rising by 1.03 percent to 2,294.69. That solid gain was a welcome turnaround after two weeks of modest losses, and it was also enough to lift the benchmark index above 2,300 (intraday) for the first time ever. The Dow Jones Industrial Average (DJIA) hit a milestone as well last week: 20,000. Compared to the S&P 500, the Dow is a lousy gauge of the overall stock market because it is made up of only 30 stocks and is a price-weighted index. However, many retail investors are likely more familiar with the Dow, so seeing headlines on television about it climbing to a new historic level could be what is needed to get those reluctant participants who were still on the sidelines to finally partake in the post-election run-up in equities, i.e. fear of missing out.

1yu65351y635415.jpg y31655y56451.jpg

Contrarian investors, though, may suggest proceeding with caution at these elevated levels and point to this weekend’s cover of Barron’s, which proclaimed “Next Stop Dow 30,000.” Other excuses that some traders may use for taking profits in the near-term include the deluge of data on the economy and corporate earnings scheduled to be released over the next few weeks, along with the recent uptick in the volume of headlines coming out of Washington. However, for retirement investors with longer time horizons, the focus needs to remain on accumulating wealth through consistent participation in tax-advantaged savings vehicles. Such efforts can be enhanced with 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 mortgage and refinance applications rose, the nation’s trade deficit narrowed slightly, demand for U.S.-manufactured durable goods (ex-transportation) improved, core capital expenditures increased, gauges of both national and regional manufacturing activity firmed, activity in the larger services sector expanded at a faster rate, and consumer sentiment lifted to a 13-year high. As for the negatives, housing inflation picked up, existing home sales fell, new home sales plunged, the number of Americans making first-time claims for unemployment benefits increased, and U.S. gross domestic product (GDP) in the fourth quarter of 2016 grew by less than anticipated. This week the pace of economic data picks up, with several important reports on consumers, wage growth, manufacturing, and employment scheduled to be released. That also includes the latest announcement on monetary policy from the Federal Open Market Committee (FOMC) on Wednesday and the potentially market-moving January job report from the Bureau of Labor Statistics (BLS) this Friday.


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

What To Watch:








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

Post author: Charles Couch