Markets, Economy

Weekly Kickstart (10/09/2017-10/13/2017)

10/9/17 8:00 AM

/iStock-841214812.jpgThe market melt-up continued last week, as the S&P 500 rose by 1.19 percent to 2,549.33. That gain left the benchmark index up a solid 13.87 percent year-to-date, and just 0.11 percent below the all-time closing high. One thing that helped fuel last week’s rally was the 2018 budget resolution passed in the U.S. House of Representatives, the first procedural step towards tax reform in America. However, there is still a long way to go before anything actually makes it through Congress and onto the President’s desk, and exactly how the market will react to the finalized tax legislation remains a major unknown. Add to that the uncertainty surrounding the economy, monetary policy, North Korea, and various other issues and it becomes clear that there are lots of potential headwinds for equities in the near-term.


Unsurprisingly, 54 percent of U.S. investors recently surveyed by Wells Fargo said that they anticipate a market correction will occur later this year in which the stock market takes back “significant gains.” Fifty-six percent of respondents reported that their financial situation would be hurt either a lot (13 percent) or a moderate amount (43 percent) by such a downturn. Less than half of investors, though, said that they are currently consulting with a financial advisor (48 percent) or rebalancing their portfolio (40 percent) in anticipation of a correction. Further, less than a fifth of survey respondents said that they are selling equities to reduce their market exposure and protect against future losses, likely one of the many reasons why stock prices continue to rise. Wells Fargo’s Heather Hunt-Ruddy added that “It’s noteworthy that investors say that their financial situation would be hurt by a market correction and yet they’re still not highly prepared. This underscores the need for professional financial advice or, at the least, a written investment plan and regular rebalancing of one’s portfolio.”


To recap a few of the things we learned about the economy last week, the positives included that the nation’s trade gap narrowed, both manufacturing and services activity improved, construction spending rebounded, corporate layoff announcements declined, initial jobless claims continued to fade after the weather-related spike, employee wage growth jumped, and measures of unemployment and underemployment fell to cycle lows. As for the negatives, mortgage and refinance applications decreased, consumer credit growth moderated, small business employment contracted, and total nonfarm payrolls in America declined for the first time in seven years. This week the pace of economic data picks up slightly, with several important reports on consumers, employment, small business, and inflation scheduled to be released.


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

What To Watch:


  • US Holiday: Columbus Day
  • Banks Closed, Markets Open







Sources: Econoday, Wells Fargo, FRBSL

Post author: Charles Couch