Markets, Economy

Weekly Kickstart (11/11/2019-11/15/2019)

11/11/19 8:00 AM

iStock-626627280.jpgStocks continued higher last week, as the S&P 500 rose by 0.85 percent to 3,093.08. That was another new all-time closing high and it left the benchmark index up 23.39 percent 2019-to-date. November marks the beginning of what have historically been the strongest 3- and 6-month periods for equities, and this is especially true when stocks were already performing well during the first ten months of the year. Specifically, when the S&P 500 ended October with a YTD gain greater than 20 percent, the broad index continued higher in November 86 percent of the time, with a median increase of 3 percent. Strength clearly appears to beget strength in the market, but even with the favorable seasonality past performance does not guarantee future results, and the S&P 500 has already rallied for five weeks in a row despite there still being a lot of uncertainty surrounding the trade war and other important issues. All of this means that even if equities continue higher it will not necessarily be smooth sailing for the markets.

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Many savvy 401(k) investors, though, are perhaps less concerned about these potential near-term fluctuations in stock prices because they understand that volatility is a natural occurrence, and what really matters when building a retirement nest egg is the combination of consistent saving and a long time horizon. For example, updated EBRI data showed that just since the end of 2016 the average 401(k) account balance for younger (25-34), less-tenured (1-4 years) workers has jumped by 153 percent, while the S&P 500 has gained “only” 36 percent (through the end of October 2019). Older workers (55-64) with at least five years of tenure saw their 401(k) balances rise by an average of just 51 percent during this same period since these individuals tend to have much larger accounts that are less sensitive to both contributions and market fluctuations. Altogether, these significant gains should provide more evidence of how routine 401(k) contributions and the long-term resiliency of the market can together help offset periods of heightened volatility and maximize compound growth. 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.

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To recap a few of the things we learned about the economy last week, the positives included that the nation’s trade deficit narrowed, gauges of service sector activity continued to signal expansion, job creation firmed, consumer confidence improved, and the number of Americans making first-time claims for unemployment benefits fell back to a near half-century low. As for the negatives, mortgage applications slid, factory orders fell, credit demand softened, total job openings decreased, productivity unexpectedly declined, unit labor costs jumped, and U.S. workers’ eagerness to search for better employment opportunities moderated. This week the pace of economic data picks up slightly, with a few important reports on manufacturing, consumers, employment, small business, and inflation scheduled to be released, along with a handful of speeches from Federal Reserve officials.

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What To Watch:

Monday

  • US Holiday: Veterans Day (Observed)

Tuesday

Wednesday

Thursday

Friday

 

 

Sources: Econoday, EBRI, BIG, Twitter, J.P. Morgan, FRBSL

Post author: Charles Couch

Disclosures