Markets, Economy

Weekly Kickstart (05/07/2018-05/11/2018)

5/7/18 8:00 AM

/iStock-462756183.jpgStocks remained under pressure last week, as the S&P 500 fell by 0.2 percent to 2,663.42. Uncertainty about corporate earnings, geopolitical issues, and the latest monetary policy comments from the Federal Reserve all weighed on equities last week but the benchmark index still ended down just 0.4 percent year-to-date, and only 7.3 percent below the all-time closing high. As for performance during the month of April, the S&P 500 experienced some wild swings (spikes in volatility) but still managed to post a 0.3 percent gain. Although a small increase that is still a welcome turnaround following the 3.9 percent and 2.7 percent losses seen in February and March, respectively. Participants in tax-advantaged 401(k) plans also appear to have fared better in April, according to updated data from the Employee Benefit Research Institute (EBRI).


For example, the average 401(k) account balance for younger (25-34), less tenured (1-4 years) workers rose by 0.4 percent last month, while older workers (55-64) with more than 20 years of tenure saw their 401(k) balances rise by an average of 1.1 percent. Even more impressive is that since the end of 2015, the average 401(k) account balance for younger, less-tenured workers has surged by 126.0 percent, while the S&P 500 has gained just 29.6 percent (through the end of April 2018). Older, more-tenured workers saw their 401(k) balances rise by an average of “only” 32.0 percent during this same period, not surprising since these individuals tend to have much larger accounts that are less sensitive to both contributions and market fluctuations. More importantly, these substantial gains should provide further evidence of how effective consistent participation in a tax-advantaged savings vehicle can be when trying to amass a large retirement nest egg. Additional assistance is available through the use of 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 the nation’s trade deficit narrowed, pending home sales rose, consumer spending rebounded, productivity growth improved, small business job creation increased, corporate layoff announcements dropped, nonfarm payrolls rebounded, joblessness in America continued to decline, and first-time claims for unemployment benefits held near a half-century low. As for the negatives, mortgage and refinance applications fell, construction spending decreased, small business borrowing cooled, wage growth disappointed forecasts, household inflation pressures firmed, and gauges of both manufacturing and services sector activity in America continued to send mixed signals (likely a side-effect of global trade tensions and rising input costs). This week the pace of economic data slows down considerably but there are still a few important reports on consumers, employment, small business, and inflation scheduled to be released, along with several speeches from officials at the Federal Reserve.


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

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Sources: Econoday, EBRI, FRBSL

Post author: Charles Couch