Markets, Economy

Weekly Kickstart (04/23/2018-04/27/2018)

4/23/18 8:00 AM

/iStock-462756183.jpgThe market rebound continued last week, as the S&P 500 rose by 0.52 percent to 2,670.14. That solid gain left the benchmark index down only 0.13 percent year-to-date, and just 7.06 percent below the all-time closing high. Stocks jumped earlier in the week thanks to strong earnings and easing geopolitical tensions, but the rally started to fade due to concerns about rising interest rates and the handful of other potential headwinds still looming over the market. It should also not be too surprising that many traders were quick to take profits given how choppy (frustrating) the price action has been during the past two months. Further, sentiment has become very bearish recently, as evidenced by an E-Trade poll conducted from April 1 to April 11, which found that only 52 percent of investors would describe themselves as being “bullish.” That was a 16 percentage point decline from the prior survey and the least optimistic view of equities recorded in two years.


Moreover, just half of respondents said that they expect the market to rise during the second quarter of 2018, a 31 percentage point plunge from Q1 even though the S&P 500 just posted its first quarterly decline since 2015. Similarly, an AAII survey conducted in the week ending April 12 found that 42.8 percent of individual investors believe stock prices in general will fall over the next six months. That was a 6.1 percentage point jump from just one week earlier and the most bearish sentiment reading in more than a year. Such pessimism has likely been exacerbated by the string of negative headlines in the news lately, but individual investors must remember that “time in the market is more important than timing the market.” That means the focus should not be on the near-term fluctuations in stock prices but instead on the long-term goal of amassing a large retirement nest egg. Assistance with that 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 rose, housing starts jumped, building authorizations increased, industrial production expanded, capacity utilization lifted, retail sales growth rebounded, and first-time claims for unemployment benefits held near a half-century low. As for the negatives, homebuilder sentiment moderated, and gauges of regional manufacturing activity continued to send mixed signals (likely a side-effect of the recent tariffs and overall trade uncertainty). This week the pace of economic data picks up with several important reports on manufacturing, housing, employment, consumers, and worker compensation scheduled to be released, along with the government’s first official estimate of Q1 2018 gross domestic product (GDP) growth due out on Friday.


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

What To Watch:








Sources: Econoday, E-Trade, AAII, FRBSL

Post author: Charles Couch