Markets, Economy

Weekly Kickstart (04/17/2017-04/21/2017)

4/17/17 8:00 AM

/iStock-501199714.jpgStocks were under pressure last week, with the S&P 500 falling by 1.13 percent to 2,328.95. That was the 2nd-largest weekly decline since before the election but the benchmark index is still up 4.03 percent year-to-date, and just 2.80 percent below the all-time closing high. Volatility, though, has clearly picked up recently, as evidenced by the CBOE’s VIX index, often referred to as investors’ “fear gauge,” ending last week at the highest level since election day. Further, only 29.0 percent of investors in the latest weekly AAII survey said that they expect stocks to rise in price over the next six months, compared to 37.4 percent that expect stock prices to fall.

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One of the possible reasons for last week’s apparent uptick in bearish sentiment was the continued rise in geopolitical tensions seen in the Middle East and North Korea. Moreover, some market participants fear that the latest push by the new administration for a stronger U.S. military presence overseas is another distraction from the promised tax cuts and deregulation that drove the post-election run-up in equities. Twenty-one percent of investors in the AAII survey even said that they have sold stocks and boosted their cash positions recently. However, a 22 percent plurality said that they have not made any recent changes to their positioning, and one respondent stressed that he “does not try to time the markets.” Such strategies are popular with investors who are little-concerned about near-term fluctuations in equity prices, and instead focused on amassing significant retirement wealth through decades of participation in the resilient stock market. These efforts can be enhanced with 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 holiday-shortened week, the positives included that mortgage applications increased, the total number of job openings in America rose, initial claims for unemployment benefits held near multi-decade lows, consumer sentiment improved, and wholesale, household, and trade-related inflation pressures all cooled. As for the negatives, small business owner optimism moderated, and retail sales growth disappointed expectations considerably. This week the pace of economic data remains slow but there are still several important reports on housing, manufacturing, and employment scheduled to be released.


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

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Sources: Econoday, Bloomberg, Reuters, Twitter, American Association of Individual Investors, FRBSL

Post author: Charles Couch