Markets, Economy

Weekly Kickstart (07/08/2019-07/12/2019)

7/8/19 8:00 AM

iStock-626627280.jpgStocks continued higher last week, as the S&P 500 rose by 1.65 percent to 2,990.41. That left the benchmark index up 19.29 percent 2019-to-date, and just 0.18 percent below the new all-time closing high hit on Thursday. Many Americans have benefited from the recent run-up in stock valuations. For example, 53 percent of retail investors in a new Gallup poll said that they have greater confidence in their preparedness for retirement due to the bull market, and around four in ten participants said the market's performance has made them feel more comfortable about making a major purchase this year and spending money in general. Looking ahead, 33.2 percent of investors in the latest AAII survey said that they expect stock prices to rise over the next six months. That is the fourth weekly increase in a row and the highest reading since early May.


However, 32.4 percent of investors instead anticipate a decline in stock prices in the second half of 2019, an increase from the previous week and the highest reading in roughly a month. Altogether this suggests that investors are cautiously optimistic about the market in H2, not too surprising since equities remain at record levels despite a lot of uncertainty still surrounding the trade war, monetary policy, and corporate earnings growth. With the current economic expansion in America now being the longest in history, an outright recession is arguably another growing risk for the stock market, but currently there are few warning signs of an impending downturn. Investors in a new Wells Fargo study appear to agree, with 61 percent of respondents describing the current economic environment as “booming” or “solid.” Forty percent of surveyed investors do see a recession as a possibility in 2020, but the vast majority of respondents (72 percent of retirees and 64 percent of non-retirees) encouragingly said that they are “prepared for how they will handle their investments” in the event of an economic contraction. 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 home purchase applications rose, labor force participation increased, initial jobless claims declined, corporate layoff announcements fell, and private-sector hiring rebounded. As for the negatives, the nation’s trade deficit widened, construction spending moderated, gauges of manufacturing and service sector activity continued to send mixed signals, the unemployment rate ticked higher, wage growth disappointed forecasts, and small businesses continued to reduce staff size (although weakness remains concentrated in tariff-sensitive industries). This week the pace of economic data slows down slightly but there are still several important reports on consumers, small business, the labor market, and inflation scheduled to be released. There will also be the potentially market-moving release of the minutes from the latest FOMC meeting, as well as three speeches by Federal Reserve chair Jerome Powell.


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Sources: Econoday, Gallup, AAII, Wells Fargo, FRBSL

Post author: Charles Couch