Markets, Economy

Weekly Kickstart (03/06/2017-03/10/2017)

3/6/17 8:00 AM

/iStock-510081306c.jpgThe market melt-up continued last week, with the S&P 500 rising by 0.67 percent to 2,383.12. That left the benchmark index up 6.44 percent year-to-date, and just 0.54 percent below the all-time closing high hit on Wednesday. As for performance during the month of February, the S&P 500 climbed 3.72 percent, the largest increase since March 2016, and other major indices experienced similar gains. Americans’ retirement assets also fared well last month, 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 8.0 percent in February, more than double the 3.2 percent gain seen in January. Older (55-64) employees with longer-tenures (20-29 years), whose account balances are less sensitive to contributions, experienced a 4.5 percent increase on average in February, nearly three times the prior month’s 1.6 percent gain.

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Helping fuel the rally last week was President Trump’s address to Congress, which lacked details but was still enough to reassure investors of his determination to pursue the tax cuts and other pro-growth policies promised during the campaign. It also seems that the stock market, at least for now, is not too concerned about the increased prospects of another interest rate hike in the near future. Indeed, a handful of Federal Reserve (Fed) officials last week argued that the case for “tightening has become a lot more compelling,” and Fed chair Janet Yellen capped everything off by saying in a speech on Friday that as long as employment and inflation continue to evolve in line with expectations, “further adjustment of the federal funds rate would likely be appropriate” at this month’s Federal Open Market Committee (FOMC) meeting. All of this jawboning seems to have had the intended effect because U.S. Treasury yields spiked across the curve last week, and the market-implied odds of a quarter point hike occurring at the March 14-15 FOMC meeting jumped from around 40 percent on Monday to over 90 percent by Friday. Although such issues are important, retirement investors should focus less on the near-term path of monetary policy and more on the long-term goal of amassing wealth. Assistance with this endeavor is available through the consistent 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 week, the positives included that mortgage and refinance applications increased, gauges of both regional and national manufacturing activity firmed, personal income growth accelerated, consumer confidence improved, and the number of Americans making first-time claims for unemployment benefits slid to a nearly 44-year low. As for the negatives, pending home sales fell, construction spending declined, core capital expenditures contracted, inflationary pressures continued to build, consumer spending rose by less than expected, and U.S. gross domestic product (GDP) growth in the fourth quarter of 2016 disappointed forecasts. This week the pace of economic data slows down but there are still several important reports on manufacturing, consumer credit, productivity, and employment scheduled to be released, along with the potentially market-moving release of the February job report from the Bureau of Labor Statistics (BLS) due out this Friday.


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

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Sources: Econoday, Twitter, Advisor Perspectives, Pension Partners, EBRI, FRBG

Post author: Charles Couch