Markets, Economy

Weekly Kickstart (10/02/2017-10/06/2017)

10/2/17 8:00 AM

/iStock-501199714.jpgThe market melt-up continued last week, as the S&P 500 rose by 0.68 percent to 2,519.36. That was another new all-time closing high and left the benchmark index up a solid 12.53 percent year-to-date. As for performance during September, the S&P 500 gained 1.93 percent, its 6th monthly increase in a row. Total return performance was even better as the broad index lifted in September for the 11th consecutive month, the longest streak since the 1950’s. Looking ahead, equities have historically enjoyed a positive bias during the final three months of the year but many investors are nervous about whether the unusually low volatility regime will continue in Q4.


Indeed, the S&P 500 has now gone 226 consecutive trading days without a 3 percent pullback, the 2nd-longest run on record, and annualized volatility is just about as low as it has ever been. Moreover, the CBOE’s VIX volatility index, often referred to as “investors’ fear gauge,” ended September at 9.51, the lowest monthly close in history. While an absence of volatility does not guarantee that a correction is about to occur, there is still a lot of uncertainty surrounding U.S. fiscal policy, North Korea, and other issues that all have the potential to provide traders with an excuse to sell. For long-term, retirement-focused investors such a pullback could be a great opportunity to enter the market at a more attractive level, although regularly consulting with a professional financial advisor is always recommended to help with risk management.


To recap a few of the things we learned about the economy last week, the positives included that the nation’s trade gap narrowed, regional manufacturing activity firmed, demand for U.S.-manufactured durable goods improved, core capital expenditures jumped, consumer inflation cooled, and gross domestic product (GDP) in the second quarter of 2017 grew by more than previously estimated. As for the negatives, new home sales fell, pending home sales declined, consumer confidence softened, real disposable income decreased, and Americans’ personal spending growth moderated. This week the pace of economic data slows down but there are still a few important reports on manufacturing, services sector activity, and employment scheduled to be released, including the potentially market-moving September 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:








Sources: Econoday, Pension Partners, FRBSL

Post author: Charles Couch