Markets, Economy

Weekly Kickstart (08/28/2017-09/01/2017)

8/28/17 8:00 AM

/iStock-491753396.jpgStocks rebounded last week, as the S&P 500 rose 0.72 percent to 2,443.05. That small but welcome gain left the benchmark index up a healthy 9.12 percent year-to-date, and just 1.53 percent below the all-time closing high. Most of the bounce occurred on Tuesday and then equities generally drifted sideways for the rest of the week as investors mulled over the likelihood of a government shutdown this fall. Indeed, Congress returns next Tuesday from its August recess with just twelve scheduled legislative days (in the House of Representatives) to tackle a somewhat lengthy to-do list. For example, the nation’s debt ceiling needs to be lifted by September 29th, and a bill must be passed to fund the government beyond September 30th.

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In both cases at least eight Democrats will need to join with Republicans in the Senate to advance any proposal through Congress, and a key unknown is if concessions will be demanded in exchange for votes. Another risk is whether the President will veto a bill that does not contain funding for a border wall. Most analysts, though, expect to see a “clean” debt ceiling bill and the passing of a continuing resolution that funds the government for a few more months in order to buy lawmakers time for the additional negotiations needed to craft more comprehensive legislation. However, even if a government shutdown is avoided, any down-to-the-wire voting or other brinkmanship could create a spike in stock market volatility similar to what occurred in 2011. These periods of heightened uncertainty can sometimes create opportunities, especially for investors focused on the long-term with many years left before retirement.


To recap a few of the things we learned about the economy last week, the positives included that housing inflation pressures moderated, demand for U.S.-manufactured durable goods (ex-transportation) jumped, core capital expenditures rebounded, and the number of Americans making first-time claims for unemployment benefits held near a multi-decade low. As for the negatives, mortgage applications fell, new home sales plunged, existing home sales declined, and gauges of regional manufacturing activity continued to send mixed signals. This week the pace of economic data picks up with lots of important reports on manufacturing, consumers, and gross domestic product (GDP) growth scheduled to be released, along with the potentially market-moving August 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.**

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Sources: Econoday, Wells Fargo, Advisor Perspectives, FRBSL

Post author: Charles Couch