October 25, 2016

A Quiet Week Ends With Indexes Up

A quiet week ends with indexes up, but right now, the general market sentiment seems unsure about where it stands and where to go from here. Why did the markets have a sluggish week? Experts last week described the markets as lazy and docile, and we have to agree. If these five days of trading are a movie, it would probably put a lot of people to sleep. On paper, last week seemed to provide plenty of opportunities for market excitement – from major companies’ earnings releases to the European Central Bank’s latest policy announcement. In reality, however, much of what we saw and heard led to little change and few strong reactions. But why? We’d point to a few key occurrences: Earnings reports were mostly good, but few were outstanding. The European Central Bank held interest rates where they are. The presidential election continues to hold the markets in limbo. While last week’s markets seemed more sluggish than normal, a little break from the excitement can be nice sometimes, especially when coupled with increases in all major U.S. indexes. Looking Ahead This week not only moves us ever closer to Election Day, but it also brings more earnings reports and ends […]
September 20, 2016
April Jobs Report Shows Slower Pace of Growth

After Summer Slumber, Volatility is Back

WEEKLY UPDATE – SEPTEMBER 19, 2016 This article is about Volatility is Back. After Summer Slumber, Volatility is Back, Volatility picked up last week due to pressures from lower oil prices and speculation about the timing of the Federal Reserve’s next rate hike. This summer has been historically calm for markets, leading markets to trade without big intraday gains or losses.[1] However, Friday broke that streak, possibly ushering in a period of greater volatility as uncertainty looms. For the week, the S&P 500 gained 0.53%, the Dow grew 0.21%, the NASDAQ added 2.31%, but the MSCI EAFE dropped 2.49%.[2] After Summer Slumber, Volatility is Back The market is facing a dilemma based on mixed information and an uncertain political landscape. On the one hand, economic data is neither weak nor strong enough to make the choice to raise interest rates easy for policymakers. On the other hand, the unpredictable nature of the presidential race contributes to market volatility. Though Fed economists have repeatedly stated their intentions to raise rates soon, no one is certain about the timing of this hike. The Federal Reserve’s Open Market Committee will meet this week to decide whether or not to raise interest rates for the […]
August 8, 2016

SP 500 at New High After Jobs Blowout

“SP 500 at New High After Jobs Blowout”, WEEKLY UPDATE – August 8, 2016 Stocks bounced last week, ending sharply higher after a better-than-expected jobs report. For the week, the SP 500 gained 0.43%, the Dow rose 0.60%, the NASDAQ added 1.14%, but the MSCI EAFE lost 1.41%.[1] SP 500 Among last week’s major events was a shockingly good July jobs report. Last month, the economy added 255,000 new jobs, blowing away expectations of 180,000 jobs.[2] Even better, the gains were broad-based and the labor force participation rate (an area of concern because fewer people in our population were actively participating in the labor force) ticked upward.[3] Overall, not too shabby. Headline unemployment remained stable at 4.9%, but that single number hides a lot of complexity. Let’s dig a little deeper. The chart below shows six different measures of unemployment, each slicing the data in a different way. The U-6 unemployment rate is the most comprehensive, showing total unemployed, marginally attached workers (discouraged workers and those considered barely employed) and those total employed part time for economic reasons.[4] You can see that all measures rose during the recession and have been steadily dropping ever since. While headline unemployment (U-3 unemployment in official […]
August 1, 2016

Stocks Close Mixed on GDP Disappointment

Stocks Close Mixed on GDP Disappointment WEEKLY UPDATE – August 1, 2016 Stocks broke their four-week winning streak, closing mixed after the release of a surprisingly low estimate of second-quarter economic growth. For the week, the S&P 500 lost 0.07%, the Dow fell 0.75%, the NASDAQ grew 1.22%, and the MSCI EAFE added 2.36%.[1] The preliminary estimate of Q2 Gross Domestic Product (GDP) growth showed that the economy grew a paltry 1.2% last quarter versus the 2.6% growth expected.[2] Investors were understandably disappointed as they had hoped for a resurgence after a slow first quarter. Professional economists were also surprised. The New York Fed had forecasted GDP growth of 2.1% and the Atlanta Fed had predicted 2.3% growth.[3] Why the surprise? Digging deeper into the data, we find that the disappointment came from an unexpected fall in business inventories. On the positive side, the drop may boost future economic growth as businesses rebuild their stockpiles. Consumer spending was strong, growing 4.2% over the previous 12 months, and accounting for nearly all the GDP growth we saw.[4] So, though the headline number was a letdown, the underlying trends in consumer spending, labor market growth, and higher savings rates could set up a banner […]