Markets, Economy

Weekly Kickstart (05/29/2018-06/01/2018)

5/29/18 8:00 AM

/iStock-462756183.jpgStocks edged higher last week, as the S&P 500 rose by 0.31 percent to 2,721.33. That small gain left the benchmark index up 1.78 percent year-to-date, and just 5.27 percent below the all-time closing high. The market rally might have been even better if not for a few headwinds that popped up and provided traders with excuses to trim their bullish bets ahead of the long weekend. For example, the announcement of a peace summit with North Korean leader Kim Jong Un had done a great deal to lower geopolitical tensions and buoy equity valuations recently. However, the likelihood of this planned meeting occurring on the scheduled June 12 date was brought into question last week, which could keep volatility elevated until investors are provided with more certainty.


Energy sector stocks also weighed heavily on the market last week, as the price of oil finally pulled back after surging earlier this month to a nearly 4-year high. However, going forward a continued rise in energy costs could actually be a negative for equities if it starts to provide a significant drag on consumer spending. For now, though, overall household inflation pressures remain muted, or at least manageable, according to the somewhat dovish minutes from the latest Federal Open Market Committee meeting. Exactly how equities will respond in the near-term to all of these above-mentioned issues (as well as a developing political crisis in Italy) remains unknown. That is why retail investors should try to not read too heavily into any wild intraday swings in the market, and instead stay focused 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 housing inflation pressures moderated, durable goods orders excluding transportation rose, core capital expenditures increased, and manufacturing activity in the Midwest and Mid-Atlantic regions of the country rebounded. As for the negatives, mortgage and refinance applications declined, the 30-year mortgage rate lifted to a 7-year high, new home sales fell, existing home sales slid, consumer sentiment cooled, and first-time claims for unemployment benefits increased by more than expected for the second week in a row. This holiday-shortened week the pace of economic data picks up with several important reports on manufacturing, consumers, inflation, and employment scheduled to be released, along with the potentially market-moving May job report from the Bureau of Labor Statistics (BLS) due out on Friday.


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

What To Watch:


  • US Holiday: Memorial Day







Sources: Econoday, FRBG, Bloomberg, FRBSL

Post author: Charles Couch