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 […]
July 25, 2016

S&P 500 Closes at Another New Record

S&P 500 Closes at Another New Record WEEKLY UPDATE – JULY 25, 2016 Stocks ended a fourth straight week of gains, sending the S&P 500 index to another record high.[1] For the week, the S&P 500 gained 0.61%, the Dow grew 0.29%, the NASDAQ added 1.40%, and the MSCI EAFE closed flat.[2] Second-quarter earnings season is in full swing, and the picture thus far is much like that of the last four quarters: uninspiring performance eked out on very little revenue growth. However, there are some encouraging signs that could presage better performance in the months to come. As of July 22nd, we have data from 126 S&P 500 companies, accounting for almost one-third of the index’s total capitalization. Overall Q2 earnings for these companies are down 1.1% from the second quarter of last year on 2.6% lower revenues. However, over 70% have managed to beat earnings estimates, indicating that […]
July 12, 2016

S&P Tests New High on Jobs Surge

S&P Tests New High on Jobs Surge WEEKLY UPDATE – JULY 11, 2016 Markets surged last week after a surprising June jobs report buoyed investor sentiment. The S&P 500 came within a hair of a new record close on the news. For the week, the S&P 500 grew 1.28%, the Dow gained 1.10%, the NASDAQ added 1.94%, and the MSCI EAFE fell 1.76%.[1] Stocks surged after Friday’s better-than-expected June jobs report. The S&P 500 closed Friday at 2,129.90, less than a point from its record closing high of 2,130.82 reached in May 2015.[2]  The rally was broad-based, and we’re happy to see that investors are shaking off global worries by responding to success stories at home. After disappointing April and May jobs reports introduced worries of a labor market slowdown, the June report showed that the economy added 287,000 new jobs last month. Since expectations called for around 165,000 jobs, […]
June 20, 2016

Fed Blinks on Brexit Fears – Financially Simple

Fed Blinks on Brexit Fears WEEKLY UPDATE – JUNE 20, 2016 Markets fell on Brexit fears and concerns about the Fed’s dovish statements, giving the Dow its worst week in a month.[1] For the week, the S&P 500 slipped 1.19%, the Dow fell 1.06%, the NASDAQ dropped 1.92%, and the MSCI EAFE lost 2.78%.[2] The big news last week was the Federal Reserve’s decision not to raise interest rates. The decision wasn’t a surprise; just before the announcement, traders had assigned just a 1.9% chance of a June rate increase.[3] Looking at the official statement, we can see that the Fed is concerned enough about a slowdown in the labor market and persistently low economic growth to hold off on raising rates.[4] However, the Fed largely hasn’t changed its forecasts for economic growth or unemployment, indicating that its concerns may be short-term.[5] Is that decision a reflection of the data or a […]
June 7, 2016

What Did the May Jobs Report Show Us?

What Did the May Jobs Report Show Us? WEEKLY UPDATE – JUNE 6, 2016 Stocks closed the holiday-shortened week mixed, with some sectors losing ground while others gained after a disappointing May jobs report signaled that the economy may not be strong enough for the Federal Reserve to raise rates this month. For the week, the S&P 500 ended flat, the Dow lost 0.37%, the NASDAQ increased 0.18%, and the MSCI EAFE added 0.13%.[1] On Friday, we got a look at how the labor market did in May. Analysts looked to the report to see whether the labor market would give the Fed the ammunition it needed to move at the June meeting. Here are a few things we took away: Job growth disappoints…but it has happened before The economy created just 38,000 new jobs last month, the worst showing since September 2010. The number of new jobs sharply missed […]