The market melt-up continued last week, as the S&P 500 rose by 0.28 percent to 2,683.34. That small gain still left the benchmark index up an outstanding 19.85 percent year-to-date, and just 0.25 percent below the all-time closing high. However, most of last week’s rally occurred on Monday when stocks gapped higher on optimism about Congress’s tax overall, and then equities chopped around for the rest of the week and struggled to push to new highs. Such price action, even after President Trump officially signed the $1.5 trillion tax package into law, suggests that the positive news might have already been priced in.
Some Wall Street analysts would agree, while others remain optimistic about the near-term trajectory of the stock market. Even with the tax cuts now complete, there are still many issues left for lawmakers to tackle, e.g. raising the nation’s debt ceiling, which could provide market participants with excuses to take profits (sell). More importantly, trading volumes were very light last week and could remain so for the rest of 2017 due to the Christmas and New Year’s holidays. As a result, retail investors should avoid reading too heavily into any near-term market fluctuations, and instead stay focused on long-term wealth creation through consistent participation in a tax-advantaged savings vehicle, 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 consumer spending growth firmed, housing starts rose, existing home sales jumped, new home sales surged, and homebuilder confidence improved. As for the negatives, building authorizations declined, inflation pressures picked up, first-time claims for unemployment benefits spiked, the average personal savings rate for Americans fell, consumer sentiment slid, durable goods orders (ex-transportation) decreased, core capital expenditures disappointed forecasts, and U.S. gross domestic product (GDP) growth in the third quarter of 2017 was revised slightly lower. This holiday-shortened week the pace of economic data remains slow but there are still a few important reports on manufacturing, consumers, and employment scheduled to be released.
**A more detailed snapshot of the U.S. economy can be found here.**
What To Watch:
- US Holiday: Christmas Day
- Markets Closed
- Richmond Fed Manufacturing Index 10:00 AM ET
- Dallas Fed Mfg Survey 10:30 AM ET
- 2-Yr Note Auction 1:00 PM ET
- MBA Mortgage Applications 7:00 AM ET
- S&P Corelogic Case-Shiller HPI 9:00 AM ET
- Consumer Confidence 10:00 AM ET
- Pending Home Sales Index 10:00 AM ET
- 5-Yr Note Auction 1:00 PM ET
- International Trade in Goods 8:30 AM ET
- Jobless Claims 8:30 AM ET
- EIA Natural Gas Report 10:30 AM ET
- EIA Petroleum Status Report 11:00 AM ET
- 7-Yr Note Auction 1:00 PM ET
Sources: Econoday, The Hill, Wells, Fargo, ZH, Bloomberg, FRBSL
Post author: Charles Couch