Markets, Economy

Weekly Kickstart (06/26/2017-06/30/2017)

6/26/17 8:00 AM

/iStock-510081306c.jpgStocks continued higher last week, with the S&P 500 rising by 0.21 percent to 2,438.30. That gain left the benchmark index up a solid 8.91 percent 2017-to-date, and just 0.62 percent below the all-time closing high. Last week’s rally might have been even better if not for the continued decline in the price of oil that has weighed heavily on stocks in the energy sector. In fact, the price for a barrel of West Texas Intermediate (WTI) crude oil last week dipped below $45 for the first time since November, in turn extending the year-to-date decline to roughly 20 percent. The latest leg lower in oil is due to renewed concerns about oversupply, and if the downtrend persists it could result in lower business fixed investment (capital expenditures) in the coming quarters, at least from companies in the energy arena. While that would provide a drag on U.S. gross domestic product (GDP), the overall stock market could still push higher just like it did during the first half of 2017 amid falling oil prices and modest economic growth.


However, only about one in three retail investors expect stock prices to rise over the next six months, according to a weekly poll conducted by the American Association of Individual Investors (AAII). That is down from 45.6 percent at the start of the year and may be partially related to heightened political uncertainty. Indeed, a new survey by Hartford Funds found that 37 percent of investors said that domestic politics are causing more sleepless nights for them than international politics. Professional financial advisers, though, also participated in the survey and they were a lot more likely to say they are sleeping soundly than being kept awake by domestic or international politics. Moreover, 62 percent of advisers agreed that client anxiety led to poor investment decisions last year, and John Diehl, senior vice president of strategic markets for Hartford Funds, stressed that “advisers typically see less reason for concern in times of political disruption because they are able to tune out the noise; they understand that there’s less of a connection between politics and market cycles.” Diehl added that “helping clients better understand their risk tolerance and how anxiety can lead to poor investment decisions is more important now than ever before.”


To recap a few of the things we learned about the economy last week, the positives included that mortgage and refinance applications lifted, new home sales rebounded, existing home sales rose, manufacturing activity in the Midwest region of the country accelerated, and the number of Americans making first-time claims for unemployment benefits held below 300K for the 120th week in a row. As for the negatives, housing inflation pressures continued to build. This week the pace of economic data picks up slightly with several important reports on housing, manufacturing, employment, consumers, and inflation scheduled to be released, along with the final revision to the government’s official measure of U.S. GDP growth during the first quarter of 2017.


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

What To Watch:








Sources: Econoday, AAII, Hartford Funds, Wells Fargo, FRBSL

Post author: Charles Couch