Market Week: January 16, 2018

 

The Markets (as of market close January 12, 2018)

Equities continued their strong showing to start the year. Each of the benchmark indexes listed here posted solid gains, led by the Russell 2000. The S&P 500 advanced more than 1.0% for the second week in a row — the first time that’s happened since last July. Investors may be expecting a continuation of strong corporate profits as the fourth-quarter earnings reporting season began Friday. News that China may curtail or even halt its purchase of U.S. Treasuries pushed yields on the 10-year note to their highest level in several months. The price of oil continues to rise, boosting energy stocks. Strong retail sales in December may have encouraged investors to believe that the economy will continue to expand, while sending retail stocks higher.

The price of crude oil (WTI) climbed to $64.40 per barrel last Friday, up from the prior week’s closing price of $61.55 per barrel. The price of gold (COMEX) rose to $1,338.30 by early Friday evening, ahead of the prior week’s price of $1,320.90. The national average retail regular gasoline price increased to $2.522 per gallon on January 8, 2018, $0.002 above the prior week’s price and $0.134 more than a year ago.

Market/Index 2017 Close Prior Week As of 1/12 Weekly Change YTD Change
DJIA 24719.22 25295.87 25803.19 2.01% 4.39%
Nasdaq 6903.39 7136.56 7261.06 1.74% 5.18%
S&P 500 2673.61 2743.15 2786.24 1.57% 4.21%
Russell 2000 1535.51 1560.01 1591.97 2.05% 3.68%
Global Dow 3085.41 3175.51 3229.08 1.69% 4.66%
Fed. Funds target rate 1.25%-1.50% 1.25%-1.50% 1.25%-1.50% 0 bps 0 bps
10-year Treasuries 2.41% 2.47% 2.54% 7 bps 13 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic Headlines

·         Consumer prices have remained relatively stable through 2017, according to the Consumer Price Index. The price increase was driven primarily by an increase in housing and medical care costs. For the last month of the year, the CPI increased a marginal 0.1%. Over the year, the index rose 2.1%. Core prices, less food and energy, increased 0.3% in December — the largest increase since last January. For 2017, core prices have increased 1.8%.

·         In yet another sign that price inflationary pressures are stagnant, the Producer Price Index for December fell 0.1% after advancing 0.4% in both October and November. This drop in prices is the first such decline since August 2016. Most of the decline is attributable to a 0.2% decline in the prices for services. Core prices (less food, energy, and trade services) edged up 0.1% in December. For the 12 months ended in December, the PPI rose 2.6% after advancing 1.7% in 2016. Core prices increased 2.3% in 2017, after climbing 1.8% the prior year.

·         With prices remaining consistent, it isn’t surprising that retail sales picked up in December, particularly during the holiday shopping season. Advance estimates of U.S. retail and food services sales for December 2017 increased 0.4% from the previous month, and 5.4% from December 2016. Total sales for 2017 were up 4.2%.

·         There were 5.9 million job openings on the last business day of November, according to the Job Openings and Labor Turnover report from the Bureau of Labor Statistics. There were 5.5 million hires and 5.2 million separations. The quits rate was 2.2%, while the rate of layoffs and discharges was 1.1%. Job openings increased in retail trade (+88,000), but decreased in other services (-64,000); transportation, warehousing, and utilities (-60,000); and real estate and rental and leasing (-39,000). Over the 12 months ended in November, hires totaled 64.6 million and separations totaled 62.4 million, yielding a net employment gain of 2.1 million.

·         The federal deficit was $23.2 billion in December. Over the first three months of fiscal 2018, the total deficit sits at $224.9 billion. For December, government receipts were $325.8 billion, while the government spent about $349 billion.

·         Prices for U.S. imports ticked up 0.1% in December, following an 0.8% rise the previous month. Higher fuel prices more than offset a decline in the price index for nonfuel prices in December. In contrast, U.S. export prices edged down 0.1% in December, after advancing 0.5% in November. Nevertheless, export prices rose 2.6% in 2017 following a 1.3% rise in 2016. The 2017 advance was the largest calendar-year increase since 2011, when the index rose 3.6%.

·         In the week ended January 6, initial claims for unemployment insurance was 261,000, an increase of 11,000 from the previous week’s level. The advance insured unemployment rate dipped to 1.3%. The advance number of those receiving unemployment insurance benefits during the week ended December 30 was 1,867,000, a decrease of 35,000 from the prior week’s level, which was revised down by 12,000. This is the lowest level for insured unemployment since December 29, 1973, when it was 1,805,000.

Eye on the Week Ahead

The holiday (Martin Luther King Jr. Day) week offers little in terms of economic reports. However, the latest report on new residential construction for December is out this week. Applications for building permits and housing completions were down in November, although housing starts were up. Frigid temperatures and some inclement weather may put a further damper on new home building in December.

Data sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market data: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

IMPORTANT DISCLOSURES

Content has been provided by Broadridge Investor Communication Solutions, Inc.  Broadridge does not provide Investment, tax or legal advice.  The information presented here is not specific to any individual’s personal circumstances.

This publication is provided as a service to clients and associates of PFA solely for their own use and information.  The material is derived from sources believed to be reliable but its accuracy and the opinions based thereon are not guaranteed and have not been verified.  The content in this publication is for general information and education purposes only and not intended to serve as individual investment advice.  You should seek independent advice from a professional based on your individual circumstances.  The information in these materials may change at any time without notice.  To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

This communication is strictly intended for individuals residing in the state(s) of CA, FL, IL, MO and TX. No offers may be made or accepted from any resident outside the specific states referenced.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018.

Market Week: January 8, 2018

 

The Markets (as of market close January 5, 2017)

The first week of 2018 saw equities enjoy a strong start to the new year. Less than a year after breaking the 20000 mark, the Dow soared past 25000 last week. The wide-ranging S&P 500 also posted a record close while climbing 2.60%. The Nasdaq picked up in 2018 right where it left off in 2017, posting a 3.38% weekly gain, boosted by surging technology stocks. Energy stocks were strong as the price of oil rose again last week. As bond prices fell, bond yields moved higher, with the yield on 10-year Treasuries increasing by 6 basis points.

The price of crude oil (WTI) climbed to $61.55 per barrel last Friday, up from the prior week’s closing price of $60.10 per barrel. The price of gold (COMEX) rose to $1,320.90 by early Friday evening, ahead of the prior week’s price of $1,305.10. The national average retail regular gasoline price increased to $2.520 per gallon on January 1, 2018, $0.048 above the prior week’s price and $0.143 more than a year ago.

Market/Index 2017 Close Prior Week As of 1/5 Weekly Change YTD Change
DJIA 24719.22 24719.22 25295.87 2.33% 2.33%
Nasdaq 6903.39 6903.39 7136.56 3.38% 3.38%
S&P 500 2673.61 2673.61 2743.15 2.60% 2.60%
Russell 2000 1535.51 1535.51 1560.01 1.60% 1.60%
Global Dow 3085.41 3085.41 3175.51 2.92% 2.92%
Fed. Funds target rate 1.25%-1.50% 1.25%-1.50% 1.25%-1.50% 0 bps 0 bps
10-year Treasuries 2.41% 2.41% 2.47% 6 bps 6 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic Headlines

·         The employment sector finished 2017 in good shape. There were 148,000 new jobs added in December and the unemployment rate, at 4.1%, was unchanged for the third consecutive month. Job gains occurred in health care, construction, and manufacturing. In 2017, payroll employment growth totaled 2.1 million, compared with a gain of 2.2 million in 2016. Over the year, the unemployment rate and the number of unemployed persons were down by 0.6 percentage point and 926,000, respectively. The labor force participation rate, at 62.7%, was unchanged over the month and over the year. The employment-population ratio was unchanged at 60.1% in December but was up by 0.3 percentage point over the year. The average workweek was unchanged at 34.5 hours in December. Average hourly earnings for December rose by $0.09 to $26.63. Over the year, average hourly earnings have risen by $0.65, or 2.5%.

·         The international trade deficit for goods and services was $50.5 billion in November, up $1.6 billion from October. November exports were $200.2 billion, $4.4 billion more than October exports. November imports were $250.7 billion, $6.0 billion more than October imports. Year-to-date, the goods and services deficit increased $53.4 billion, or 11.6%, from the same period in 2016.

·         Purchasing managers noted an improving manufacturing sector in December, according to the survey conducted by IHS Markit. The U.S. Manufacturing Purchasing Managers’ Index™ registered 55.1 in December, up from 53.9 in November — the highest such reading since March 2015. Greater demand spurred acceleration in new orders, stronger production growth, and cost inflation.

·         According to the Manufacturing ISM® Report On Business®, supply managers/respondents also reported that economic activity in the manufacturing sector expanded in December. The December PMI® registered 59.7%, up from November’s 58.2% reading. New orders, production, supplier deliveries, inventories, and prices increased in December. Only employment decreased last month.

·         Growth slowed in the services sector in December, according to the Non-Manufacturing ISM® Report On Business®. The Non-Manufacturing Index registered 1.5 percentage points lower than the November reading. Business activity and new orders also decreased last month. On the plus side, business managers reported an uptick in employment and prices. Included in the report are service industries such as retail trade; utilities; arts, entertainment and recreation; health care; accommodation and food services; finance and insurance; and real estate.

·         In the week ended December 30, initial claims for unemployment insurance was 250,000, an increase of 3,000 from the previous week’s level, which was revised up by 2,000. The advance insured unemployment rate remained 1.4%. The advance number of those receiving unemployment insurance benefits during the week ended December 23 was 1,914,000, a decrease of 37,000 from the previous week’s level, which was revised up 8,000.

Eye on the Week Ahead

Trading is expected to pick up this week following the prior two holiday-shortened weeks. Inflation indicators for December are available this week, led by the Consumer Price Index. Inflation had been stagnant for much of 2017, although consumer demand for goods and services during the holiday season may nudge prices upward — at least for December.

Data sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market data: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

IMPORTANT DISCLOSURES

Content has been provided by Broadridge Investor Communication Solutions, Inc.  Broadridge does not provide Investment, tax or legal advice.  The information presented here is not specific to any individual’s personal circumstances.

This publication is provided as a service to clients and associates of PFA solely for their own use and information.  The material is derived from sources believed to be reliable but its accuracy and the opinions based thereon are not guaranteed and have not been verified.  The content in this publication is for general information and education purposes only and not intended to serve as individual investment advice.  You should seek independent advice from a professional based on your individual circumstances.  The information in these materials may change at any time without notice.  To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

This communication is strictly intended for individuals residing in the state(s) of CA, FL, IL, MO and TX. No offers may be made or accepted from any resident outside the specific states referenced.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018.

Market Week: January 2, 2018

 

The Markets (as of market close December 29, 2017)

While 2017 surely was a strong year for equities overall, the last week of the year was lackluster at best. Each of the benchmark indexes listed here posted week-over-week losses, except for the Global Dow, which increased 0.23%. Much of last week’s performance could be attributable to nothing more than light trading during the holiday-shortened week. The Nasdaq, which led the way for the year, lost the most ground, followed by the small-cap Russell 2000. The large-cap indexes of the Dow and S&P 500, which had been consistent gainers all year, pulled back the last week of 2017. Long-term bond prices rose, pushing yields on the 10-year Treasuries down more than 7 basis points by the end of the week.

The price of crude oil (WTI) climbed to $60.10 per barrel last Friday, up from the prior week’s closing price of $58.35 per barrel. The price of gold (COMEX) rose to $1,305.10 by early Friday evening, ahead of the prior week’s price of $1,279.10. The national average retail regular gasoline price increased to $2.472 per gallon on December 25, 2017, $0.022 above the prior week’s price and $0.163 more than a year ago.

Market/Index 2016 Close Prior Week As of 12/29 Weekly Change YTD Change
DJIA 19762.60 24754.06 24719.22 -0.14% 25.08%
Nasdaq 5383.12 6959.96 6903.39 -0.81% 28.24%
S&P 500 2238.83 2683.34 2673.61 -0.36% 19.42%
Russell 2000 1357.13 1542.93 1535.51 -0.48% 13.14%
Global Dow 2528.21 3078.46 3085.41 0.23% 22.04%
Fed. Funds target rate 0.50%-0.75% 1.25%-1.50% 1.25%-1.50% 0 bps 75 bps
10-year Treasuries 2.44% 2.48% 2.41% -7 bps -3 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic Headlines

·         The international trade deficit was $69.7 billion in November, up $1.6 billion, or 2.3%, from $68.1 billion in October. Exports of goods for November were $133.7 billion, $3.8 billion more than October exports. Imports of goods for November were $203.4 billion, $5.4 billion more than October imports.

·         The Conference Board Consumer Confidence Index® fell to 122.1 in December, down from 128.6 in November. The Present Situation Index, which measures consumers’ views on the present state of the economy, increased from 154.9 to 156.6, although the Expectations Index declined from 111.0 in November to 99.1 in December.

·         In the week ended December 23, initial claims for unemployment insurance was 245,000, unchanged from the previous week’s level. The advance insured unemployment rate remained 1.4%. The advance number of those receiving unemployment insurance benefits during the week ended December 16 was 1,943,000, an increase of 7,000 from the previous week’s level, which was revised up 4,000.

Eye on the Week Ahead

The first week of 2018 should see trading pick up. The December 2017 employment report is out this Friday, which could reveal a slight drop in the unemployment rate.

Data sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market data: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

IMPORTANT DISCLOSURES

Content has been provided by Broadridge Investor Communication Solutions, Inc.  Broadridge does not provide Investment, tax or legal advice.  The information presented here is not specific to any individual’s personal circumstances.

This publication is provided as a service to clients and associates of PFA solely for their own use and information.  The material is derived from sources believed to be reliable but its accuracy and the opinions based thereon are not guaranteed and have not been verified.  The content in this publication is for general information and education purposes only and not intended to serve as individual investment advice.  You should seek independent advice from a professional based on your individual circumstances.  The information in these materials may change at any time without notice.  To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

This communication is strictly intended for individuals residing in the state(s) of CA, FL, IL, MO and TX. No offers may be made or accepted from any resident outside the specific states referenced.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018.

Market Week: December 26, 2017

 

The Markets (as of market close December 22, 2017)

Last week saw moderate trading and lukewarm gains. The small caps of the Russell 2000 outperformed the Dow and S&P 500, while the Global Dow posted the highest gains last week. Rising energy shares helped push the S&P 500, as oil prices continued to expand. The tax code overhaul didn’t seem to impact equities, at least not in the immediate aftermath of the passage of the landmark legislation. Meanwhile, long-term bond prices fell, pushing yields higher. The yield on 10-year Treasuries eclipsed its 2016 year-end closing yield heading into the last week of 2017.

The price of crude oil (WTI) climbed to $58.35 per barrel last Friday, up from the prior week’s closing price of $57.63 per barrel. The price of gold (COMEX) rose to $1,279.10 by early Friday evening, ahead of the prior week’s price of $1,258.20. The national average retail regular gasoline price decreased for the fourth week in a row to $2.450 per gallon on December 18, 2017, $0.035 lower than the prior week’s price but $0.186 more than a year ago.

Market/Index 2016 Close Prior Week As of 12/22 Weekly Change YTD Change
DJIA 19762.60 24651.74 24754.06 0.42% 25.26%
Nasdaq 5383.12 6936.58 6959.96 0.34% 29.29%
S&P 500 2238.83 2675.81 2683.34 0.28% 19.85%
Russell 2000 1357.13 1530.42 1542.93 0.82% 13.61%
Global Dow 2528.21 3041.15 3078.46 1.23% 21.76%
Fed. Funds target rate 0.50%-0.75% 1.25%-1.50% 1.25%-1.50% 25 bps 75 bps
10-year Treasuries 2.44% 2.35% 2.48% 13 bps 4 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic Headlines

·         According to the Bureau of Economic Analysis, the gross domestic product for the third quarter grew at an annual rate of 3.2%. The second-quarter GDP increased 3.1%. Gross domestic income — the sum of incomes earned and costs incurred in the production of GDP — increased 2.0% in the third quarter, compared with an increase of 2.3% in the second. The increase in the third-quarter GDP reflected growth in consumer spending, private inventory investment, nonresidential (commercial/business) fixed investment, exports, and government spending. Negatives in the report reflected decreases in residential fixed investment and imports. Also noteworthy, corporate profits increased $90.2 billion in the third quarter compared with an increase of $14.4 billion in the second quarter.

·         Consumer income and spending increased in November, according to the latest report from the Bureau of Economic Analysis. Personal (pre-tax) income increased $54.0 billion, or 0.3%; disposable (after-tax) personal income increased $50.9 billion, or 0.4%; and personal consumption expenditures (consumer spending) increased $87.1 billion, or 0.6%. Core personal consumption expenditures (excluding the volatile food and energy components) gained only 0.1% in November. Core PCE is an inflation indicator closely followed by the Fed. Personal saving, as a percentage of disposable personal income, increased 2.9% in November.

·         New residential construction (all housing types) slowed in November, according to the latest report from the Census Bureau. Building permits, an indicator of future construction, fell 1.4% compared to October, although applications for single-family homes increased 1.4%. Home completions dropped 6.1% in November from the prior month (single-family completions declined 4.6%). While permits and home completions fell, the number of new home construction starts increased by 3.3% in November, led by building starts for single-family homes, which climbed 5.3%.

·         Sales of new single-family homes soared in November, increasing 17.5% above the revised October rate. November’s new home sales are 26.6% above the November 2016 estimate. The median sales price of new houses sold in November 2017 was $318,700 ($319,600 in October). The average sales price was $377,100 ($394,700 in October). The seasonally adjusted estimate of new houses for sale at the end of November was 283,000. This represents a supply of 4.6 months at the current sales rate.

·         According to the National Association of Realtors®, sales of existing homes in November jumped 5.6% over October’s sales pace. Total sales, which include single-family homes, townhomes, condominiums, and co-ops, are 3.8% higher than a year ago, and haven’t been this high since the 6.42 million annual sales pace of December 2006. The median existing-home price for all housing types in November was $248,000, up 5.8% from November 2016 ($234,400). November’s price increase marks the 69th straight month of year-over-year gains. Total housing inventory at the end of November dropped 7.2% to 1.67 million existing homes available for sale (9.7% lower than a year ago), and has fallen year-over-year for 30 consecutive months. Unsold inventory is at a 3.4-month supply at the current sales pace, which is down from 4.0 months a year ago. The lack of inventory could slow sales down in December.

·         Demand for long-lasting manufactured goods increased in November — a good sign for manufacturers. New orders for durable goods increased $3.1 billion, or 1.3%, in November over the prior month. This increase, up 3 of the last 4 months, followed a 0.4% October decrease. Shipments of manufactured durable goods in November, up 6 of the last 7 months, increased $2.4 billion, or 1.0%, to $244.5 billion. This followed a 0.5% October increase. Unfilled orders for manufactured durable goods in November, up 3 consecutive months, increased $1.1 billion, or 0.1%, to $1,137.0 billion. Inventories of manufactured durable goods in November, up 16 of the last 17 months, increased $0.9 billion, or 0.2%, to $405.2 billion.

·         In the week ended December 15, the advance figure for initial claims for unemployment insurance was 245,000, an increase of 20,000 from the previous week’s level. The advance insured unemployment rate ticked up to 1.4%. The advance number of those receiving unemployment insurance benefits during the week ended December 9 was 1,932,000, an increase of 43,000 from the previous week’s level, which was revised up 3,000.

Eye on the Week Ahead

Typically, the week between Christmas and New Year’s Day does not provide much in terms of economic reports or stock market movement. However, this week does offer an opportunity to reflect on 2017 in general, and the stock market in particular, which has outpaced its 2016 performance.

Data sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market data: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

IMPORTANT DISCLOSURES

Content has been provided by Broadridge Investor Communication Solutions, Inc.  Broadridge does not provide Investment, tax or legal advice.  The information presented here is not specific to any individual’s personal circumstances.

This publication is provided as a service to clients and associates of PFA solely for their own use and information.  The material is derived from sources believed to be reliable but its accuracy and the opinions based thereon are not guaranteed and have not been verified.  The content in this publication is for general information and education purposes only and not intended to serve as individual investment advice.  You should seek independent advice from a professional based on your individual circumstances.  The information in these materials may change at any time without notice.  To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

This communication is strictly intended for individuals residing in the state(s) of CA, FL, IL, MO and TX. No offers may be made or accepted from any resident outside the specific states referenced.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2017.

MARKET WEEK: DECEMBER 18, 2017

The Markets (as of market close December 15, 2017)

Each of the benchmark indexes listed here closed last week in the black, led by the Nasdaq and the Dow, both of which climbed over 1.00%. Stocks appear to have followed the ebb and flow of the proposed tax plan, which seems to have enough support for congressional passage this week. Investors may see a lowering of corporate taxes as leading to an increase in company profits and value. A 25 basis point increase in the federal funds rate did not seem to have much of an impact on investors.

The price of crude oil (WTI) climbed slightly to $57.63 per barrel last Friday, up from the prior week’s closing price of $57.34 per barrel. The price of gold (COMEX) rose to $1,258.20 by early Friday evening, ahead of the prior week’s price of $1,250.50. The national average retail regular gasoline price decreased to $2.485 per gallon on December 11, 2017, $0.015 lower than the prior week’s price but $0.249 more than a year ago.

Market/Index 2016 Close Prior Week As of 12/15 Weekly Change YTD Change
DJIA 19762.60 24329.16 24651.74 1.33% 24.74%
Nasdaq 5383.12 6840.08 6936.58 1.41% 28.86%
S&P 500 2238.83 2651.50 2675.81 0.92% 19.52%
Russell 2000 1357.13 1521.72 1530.42 0.57% 12.77%
Global Dow 2528.21 3015.17 3041.15 0.86% 20.29%
Fed. Funds target rate 0.50%-0.75% 1.00%-1.25% 1.25%-1.50% 25 bps 75 bps
10-year Treasuries 2.44% 2.37% 2.35% -2 bps -9 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic Headlines

·         Not unexpectedly, the Federal Open Market Committee decided to raise the target range for the federal funds rate 25 basis points to 1.25%-1.50%. This marks the third such rate increase in 2017. The Committee based this rate hike on continued strengthening of the labor market and rising economic activity. Despite hurricane-related disruptions, the Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will remain strong. Inflation on a 12-month basis is expected to remain somewhat below 2% in the near term but to stabilize around the Committee’s 2% objective over the medium term.

·         Producer prices increased 0.4% in November, the same increase as in each of the previous two months. Over the last 12 months, producer prices are up 3.1%, which is the largest 12-month price gain since the 12-month period ended January 2012. The producer prices less foods, energy, and trade services rose 0.4% in November, the largest advance since increasing 0.6% in April. For the 12 months ended in November, prices less foods, energy, and trade services moved up 2.4%.

·         The increase in producer prices may be impacting consumer prices. The Consumer Price Index (CPI) rose 0.4% in November and is up 2.2% over the past 12 months. Energy prices rose 3.9% for the month and accounted for about three-fourths of the increase in the CPI. The index for all items less food and energy increased a marginal 0.1%, and is up 1.7% over the 12 months ended in November.

·         November retail sales were $492.7 billion, an increase of 0.8% from the previous month, and 5.8% above November 2016. Retail sales excluding auto sales increased 1.0% in November. Gasoline station sales increased 2.8% for the month and are up 12.2% over last November. Nonstore (online) retail sales climbed 2.5% in November and are 10.4% ahead of November 2016 sales.

·         The number of job openings dipped by about 181,000 in October compared to September, according to the latest Job Openings and Labor Turnover report from the Bureau of Labor Statistics. Job openings have been at or near record high levels since June. Job openings increased in accommodation and food services (+94,000), construction (+48,000), and real estate and rental and leasing (+40,000). Job openings decreased in wholesale trade (-90,000), finance and insurance (-47,000), information (-32,000), and nondurable goods manufacturing (-26,000). In October, hires increased to 5.6 million and separations were little changed at 5.2 million. Over the 12 months ended in October, hires totaled 64.3 million and separations totaled 62.2 million, yielding a net employment gain of 2.1 million.

·         The federal deficit for November soared to $138.5 billion, about $75 billion higher than the October deficit and $1.8 billion higher than the November 2016 deficit. Total government receipts for November were $208.4 billion, and total government outlays were $346.9 billion. Over the first two months of the 2018 fiscal year, the deficit stands at $201.8 billion, which is 10.6% greater than the deficit over the same period last fiscal year.

·         U.S. import prices rose 0.7% in November after ticking up 0.1% in October. Higher prices for fuel drove the increase in November as nonfuel prices recorded no change. Import fuel prices rose 22.2% over the past year, driven by a 24.1% increase in petroleum prices. U.S. export prices increased 0.5% in November following a 0.1% advance the previous month. Export prices advanced 3.1% over the past 12 months and have not recorded an over-the-year decrease since the index fell 0.2% in November 2016.

·         According to the Federal Reserve, industrial production moved up 0.2% in November after posting an upwardly revised increase of 1.2% in October. Manufacturing production also rose 0.2% in November, its third consecutive monthly gain. The output of utilities dropped 1.9%. The index for mining increased 2.0%. The index for mining increased 2.0%, as oil and gas extraction returned to normal levels after being held down in October by Hurricane Nate. Excluding the post-hurricane rebound in oil and gas extraction, total industrial production would have been unchanged in November. Total industrial production was 3.4% above its year-earlier level.

·         In the week ended December 9, the advance figure for initial claims for unemployment insurance was 225,000, a decrease of 11,000 from the previous week’s level. The advance insured unemployment rate slipped to 1.3%. The advance number of those receiving unemployment insurance benefits during the week ended December 2 was 1,886,000, a decrease of 27,000 from the previous week’s level, which was revised up 5,000.

Eye on the Week Ahead

The week before Christmas is a busy one for economic news. The third and final report on the gross domestic product for the third quarter is available this week, along with November’s monthly report on sales of new and existing homes.

Data sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market data: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

IMPORTANT DISCLOSURES

Content has been provided by Broadridge Investor Communication Solutions, Inc.  Broadridge does not provide Investment, tax or legal advice.  The information presented here is not specific to any individual’s personal circumstances.

This publication is provided as a service to clients and associates of PFA solely for their own use and information.  The material is derived from sources believed to be reliable but its accuracy and the opinions based thereon are not guaranteed and have not been verified.  The content in this publication is for general information and education purposes only and not intended to serve as individual investment advice.  You should seek independent advice from a professional based on your individual circumstances.  The information in these materials may change at any time without notice.  To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

This communication is strictly intended for individuals residing in the state(s) of CA, FL, IL, MO and TX. No offers may be made or accepted from any resident outside the specific states referenced.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2017.

Market Week: December 11, 2017

 

The Markets (as of market close December 8, 2017)

Last week proved to be a mixed bag of market returns as the large caps of the Dow and S&P 500 posted moderate gains, while the tech-heavy Nasdaq and small caps of the Russell 2000 closed the week down. A stronger than expected jobs report may have helped push the Dow and S&P 500 to positive territory by last Friday. Global stocks climbed on news of an agreement between the UK and the European Union, which will allow negotiations on other issues, such as a trade agreement, to move forward.

The price of crude oil (WTI) fell to $57.34 per barrel last Friday, down from the prior week’s closing price of $58.34 per barrel. The price of gold (COMEX) fell to $1,250.50 by early Friday evening, down from the prior week’s price of $1,283.00. The national average retail regular gasoline price decreased to $2.500 per gallon on December 4, 2017, $0.033 lower than the prior week’s price but $0.292 more than a year ago.

Market/Index 2016 Close Prior Week As of 12/8 Weekly Change YTD Change
DJIA 19762.60 24231.59 24329.16 0.40% 23.11%
Nasdaq 5383.12 6847.59 6840.08 -0.11% 27.07%
S&P 500 2238.83 2642.22 2651.50 0.35% 18.43%
Russell 2000 1357.13 1537.02 1521.72 -0.99% 12.13%
Global Dow 2528.21 3007.96 3015.17 0.24% 19.26%
Fed. Funds target rate 0.50%-0.75% 1.00%-1.25% 1.00%-1.25% 0 bps 50 bps
10-year Treasuries 2.44% 2.36% 2.37% 1 bps -7 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic Headlines

·         November provided another strong month for new job hires, according to the latest report from the Bureau of Labor Statistics. Employment increased by 228,000 last month. Employment growth has averaged 174,000 per month thus far this year. Employment continued to trend up in professional and business services, manufacturing, and health care. The unemployment rate remained at 4.1%, and the number of unemployed persons was essentially unchanged at 6.6 million. The average workweek for all employees increased by 0.1 hour to 34.5 hours in November. The average hourly earnings for all employees rose by $0.05 to $26.55. Over the year, average hourly earnings have risen by $0.64, or 2.5%.

·         According to the Census Bureau, the international trade deficit increased $3.8 billion to $48.7 billion in October over September. The October increase in the goods and services deficit reflected an increase in the goods deficit of $3.8 billion to $69.1 billion and a decrease in the services surplus of less than $0.1 billion to $20.3 billion. Year-to-date, the goods and services deficit increased $49.1 billion, or 11.9%, from the same period in 2016.

·         The non-manufacturing (services) sector accelerated in November, but at a slower pace than in October. According to the Institute for Supply Management, the pace of growth slowed in business activity, new orders, employment, and prices.

·         In the week ended December 2, the advance figure for initial claims for unemployment insurance was 236,000, a decrease of 3,000 from the previous week’s level. The advance insured unemployment rate remained at 1.4%. The advance number of those receiving unemployment insurance benefits during the week ended November 25 was 1,908,000, a decrease of 52,000 from the previous week’s level, which was revised up 3,000.

Eye on the Week Ahead

This week, the Federal Open Market Committee formally meets for the final time in 2017 under chairperson Janet Yellen. Some observers predict the FOMC will raise the federal funds rate by 25 basis points to a range of 1.25%-1.50%. The target range hasn’t reached 1.50% since the end of October 2008.

Data sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market data: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

IMPORTANT DISCLOSURES

Content has been provided by Broadridge Investor Communication Solutions, Inc.  Broadridge does not provide Investment, tax or legal advice.  The information presented here is not specific to any individual’s personal circumstances.

This publication is provided as a service to clients and associates of PFA solely for their own use and information.  The material is derived from sources believed to be reliable but its accuracy and the opinions based thereon are not guaranteed and have not been verified.  The content in this publication is for general information and education purposes only and not intended to serve as individual investment advice.  You should seek independent advice from a professional based on your individual circumstances.  The information in these materials may change at any time without notice.  To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

This communication is strictly intended for individuals residing in the state(s) of CA, FL, IL, MO and TX. No offers may be made or accepted from any resident outside the specific states referenced.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2017.

Market Week: December 4, 2017

 

The Markets (as of market close December 1, 2017)

Equities surged for much of last week until an abrupt decline midday last Friday culled some of the earlier gains. Nevertheless, of the indexes listed here, only the Nasdaq lost value from the prior week. The Dow led the way posting an impressive gain of 2.86%, followed by the S&P 500, which climbed over 1.5%. Reports that the Senate was close to passing a tax reform bill may have heightened investor confidence as trading picked up during the week. However, news surrounding former national security advisor Michael Flynn involving the Russian probe could have squelched investor enthusiasm last Friday.

The price of crude oil (WTI) fell to $58.34 per barrel last Friday, down slightly from the prior week’s closing price of $58.97 per barrel. The price of gold (COMEX) fell to $1,283.00 by early Friday evening, down from the prior week’s price of $1,292.60. The national average retail regular gasoline price decreased to $2.533 per gallon on November 27, 2017, $0.035 lower than the prior week’s price but $0.379 more than a year ago.

Market/Index 2016 Close Prior Week As of 12/1 Weekly Change YTD Change
DJIA 19762.60 23557.99 24231.59 2.86% 22.61%
Nasdaq 5383.12 6889.16 6847.59 -0.60% 27.20%
S&P 500 2238.83 2602.42 2642.22 1.53% 18.02%
Russell 2000 1357.13 1519.16 1537.02 1.17% 13.25%
Global Dow 2528.21 2992.73 3007.96 0.51% 18.98%
Fed. Funds target rate 0.50%-0.75% 1.00%-1.25% 1.00%-1.25% 0 bps 50 bps
10-year Treasuries 2.44% 2.34% 2.36% 2 bps -8 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic Headlines

·         The second estimate of the third-quarter gross domestic product was more favorable than the first reading. The GDP increased at an annual rate of 3.3% in the third quarter ahead of the first estimate’s growth rate of 3.0%. In the second quarter, the GDP increased 3.1%. Gross domestic income (the sum of various incomes earned and costs incurred in the production of GDP) increased 2.5% in the third quarter, compared with an increase of 2.3% (revised) in the second. The increase in the second estimate of the GDP is due to an increase in nonresidential (business) investment and inventory growth, while residential investment and net exports (imports less exports) subtracted less than initially estimated.

·         Consumer price inflation continues to slowly expand. Consumers increased their spending by 0.3% in spite of an increase in income. Personal (pre-tax) income increased 0.4% in October, while disposable personal (after-tax) income jumped 0.5% for the month. Core personal consumption expenditures, excluding food and energy, increased 0.2% over September. The personal consumption price index, a measure of the prices consumers are paying for consumer goods and services, increased a mere 0.1% in October.

·         New home sales continued to increase in October, according to the Census Bureau. Sales of new single family homes were at an annual rate of 685,000 in October, up 6.2% from September’s rate. The sales rate in October is 18.7% above the October 2016 estimate. The median new-home price in October was $312,800, while the average sales price was $400,200. The estimate of new houses for sale at the end of October was 282,000, representing a supply of 4.9 months at the current sales rate.

·         The Census Bureau announced that the trade deficit in October, the first month of the 2018 fiscal year, was $68.3 billion, up $4.2 billion from September. Exports were $129.1 billion, $1.3 billion less than September exports, while imports increased $2.9 billion in October from the prior month.

·         According to the IHS Markit final U.S. Manufacturing Purchasing Managers’ Index™ (PMI™), the manufacturing sector grew in November, but at a slightly slower pace than the previous month. Goods output slowed as well, while new orders received by manufacturers rose at the second-fastest pace since March.

·         The Conference Board Consumer Confidence Index®, which had improved in October, increased further in November. The index now stands at 129.5, up from 126.2 in October. The Present Situation Index increased from 152.0 to 153.9, while the Expectations Index rose from 109.0 last month to 113.3. Average prices charged by manufacturers in November rose at the fastest rate in the last four years.

·         The Manufacturing ISM® Report On Business® also showed manufacturing accelerated in November, but not quite as fast as in October. Manufacturing production and new orders outpaced October’s rates, while deliveries slowed.

·         Claims for unemployment insurance are on the upswing after falling the past few weeks. In the week ended November 25, the advance figure for initial claims for unemployment insurance was 238,000, a decrease of 2,000 from the previous week’s level, which was revised up by 1,000. The advance insured unemployment rate remained at 1.4%. The advance number of those receiving unemployment insurance benefits during the week ended November 18 was 1,957,000, an increase of 42,000 from the previous week’s level, which was revised up 11,000.

Eye on the Week Ahead

The last week of November reveals some important economic information. The second report on the third-quarter GDP is out this week. The initial estimate in October showed the GDP increased at a 3.0% annualized growth rate. Also revealed this week is the report on personal income and spending for October. This indicator of inflationary trends is one of the economic reports relied on by the Fed in determining whether to raise interest rates.

Data sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market data: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

IMPORTANT DISCLOSURES

Content has been provided by Broadridge Investor Communication Solutions, Inc.  Broadridge does not provide Investment, tax or legal advice.  The information presented here is not specific to any individual’s personal circumstances.

This publication is provided as a service to clients and associates of PFA solely for their own use and information.  The material is derived from sources believed to be reliable but its accuracy and the opinions based thereon are not guaranteed and have not been verified.  The content in this publication is for general information and education purposes only and not intended to serve as individual investment advice.  You should seek independent advice from a professional based on your individual circumstances.  The information in these materials may change at any time without notice.  To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

This communication is strictly intended for individuals residing in the state(s) of CA, FL, IL, MO and TX. No offers may be made or accepted from any resident outside the specific states referenced.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2017.

Market Week: November 27, 2017

The Markets (as of market close November 24, 2017)

Stocks rebounded last week in spite of the market shutting down for the Thanksgiving holiday. Each of the benchmark indexes listed here posted weekly gains, led by the Russell 2000, which posted one of its largest weekly advances this year. The tech-heavy Nasdaq was next, followed by the Global Dow. The large caps of the S&P 500 and Dow enjoyed moderately strong returns. For the year, the Nasdaq is approaching an increase of 30.0%.

The price of crude oil (WTI) rose to $58.97 per barrel last Friday, up from the prior week’s closing price of $56.63 per barrel. The price of gold (COMEX) fell to $1,292.60 by early Friday evening, down from the prior week’s price of $1,294.60. The national average retail regular gasoline price decreased to $2.568 per gallon on November 20, 2017, $0.024 lower than the prior week’s price but $0.413 more than a year ago.

Market/Index 2016 Close Prior Week As of 11/24 Weekly Change YTD Change
DJIA 19762.60 23358.24 23557.99 0.86% 19.20%
Nasdaq 5383.12 6782.79 6889.16 1.57% 27.98%
S&P 500 2238.83 2578.85 2602.42 0.91% 16.24%
Russell 2000 1357.13 1492.82 1519.16 1.76% 11.94%
Global Dow 2528.21 2953.40 2992.73 1.33% 18.37%
Fed. Funds target rate 0.50%-0.75% 1.00%-1.25% 1.00%-1.25% 0 bps 50 bps
10-year Treasuries 2.44% 2.34% 2.34% 0 bps -10 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic Headlines

·         Existing home sales continued to increase in October, according to the National Association of Realtors®. Sales of existing homes (all types) were at an annual rate of 5.48 million in October, up 2.0% from September’s rate. Single-family existing home sales climbed 2.1% for the month. The median existing-home price for all housing types in October was $247,000, up 5.5% from October 2016 ($234,100). The median existing single-family home price was $248,300 in October, up 5.4% from October 2016. Total housing inventory at the end of October decreased 3.2% to 1.80 million existing homes available for sale, which is 10.4% lower than a year ago (2.01 million) and has fallen year-over-year for 29 consecutive months. Unsold inventory is at a 3.9-month supply at the current sales pace, which is down from 4.4 months a year ago.

·         October saw new orders for long lasting (durable) goods slide following two consecutive monthly increases. New orders for manufactured durable goods decreased $2.8 billion, or 1.2%, in October. Transportation equipment, also down following two consecutive monthly increases, drove the decrease. Excluding transportation, new orders actually increased 0.4%. Manufacturers shipped more goods in October, while the number of unfilled orders remained relatively the same as in September.

·         In the week ended November 18, the advance figure for initial claims for unemployment insurance was 239,000, a decrease of 13,000 from the previous week’s level, which was revised up by 3,000. The advance insured unemployment rate rose slightly to 1.4%. The advance number of those receiving unemployment insurance benefits during the week ended November 11 was 1,904,000, an increase of 36,000 from the previous week’s level, which was revised up 8,000.

Eye on the Week Ahead

The last week of November reveals some important economic information. The second report on the third-quarter GDP is out this week. The initial estimate in October showed the GDP increased at a 3.0% annualized growth rate. Also revealed this week is the report on personal income and spending for October. This indicator of inflationary trends is one of the economic reports relied on by the Fed in determining whether to raise interest rates.

Data sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market data: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

IMPORTANT DISCLOSURES

Content has been provided by Broadridge Investor Communication Solutions, Inc.  Broadridge does not provide Investment, tax or legal advice.  The information presented here is not specific to any individual’s personal circumstances.

This publication is provided as a service to clients and associates of PFA solely for their own use and information.  The material is derived from sources believed to be reliable but its accuracy and the opinions based thereon are not guaranteed and have not been verified.  The content in this publication is for general information and education purposes only and not intended to serve as individual investment advice.  You should seek independent advice from a professional based on your individual circumstances.  The information in these materials may change at any time without notice.  To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

This communication is strictly intended for individuals residing in the state(s) of CA, FL, IL, MO and TX. No offers may be made or accepted from any resident outside the specific states referenced.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2017.

Proposed Tax Reform Legislation

On November 2, 2017, House Republicans released their comprehensive tax reform plan, the Tax Cuts and Jobs Act. Then, on November 9, 2017, Senate Republicans released their own plan. The two plans have much in common, but also have significant differences. Some key provisions of these tax proposals are discussed below. Of course, provisions may change as the legislation winds its way through Congress. Most provisions, if enacted, would be effective for 2018. Comparisons below are generally for 2018.

Individual income tax rates

Current law. There are seven regular income tax brackets: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%.

House proposal. The seven tax brackets would be reduced to four: 12%, 25%, 35%, and 39.6%.

Income Bracket Thresholds
Tax Rate Single Married Filing Jointly/ Surviving Spouse Married Filing Separately Head of Household Trust/Estate
12% $0 $0 $0 $0 $0
25% $45,000 $90,000 $45,000 $67,500 $2,550
35% $200,000 $260,000 $130,000 $200,000 $9,150
39.6% $500,000 $1,000,000 $500,000 $500,000 $12,500

In addition, the benefit of the 12% rate would be recaptured by an additional tax if adjusted gross income (AGI) exceeds $1,000,000 ($1,200,000 for married filing jointly and surviving spouses).

Senate proposal. There would be seven tax brackets: 10%, 12%, 22%, 24%, 32%, 35%, and 38.5%.

Income Bracket Thresholds
Tax Rate Single Married Filing Jointly/ Surviving Spouse Married Filing Separately Head of Household Trust/Estate
10% $0 $0 $0 $0 $0
12% $9,525 $19,050 $9,525 $13,600 N/A
22% $38,700 $77,400 $38,700 $51,800 N/A
24% $70,000 $140,000 $70,000 $70,000 $2,550
32% $160,000 $320,000 $160,000 $160,000 N/A
35% $200,000 $400,000 $200,000 $200,000 $9,150
38.5% $500,000 $1,000,000 $500,000 $500,000 $12,500

Standard deduction, itemized deductions, and personal exemptions

Current law. In general, personal (and dependency) exemptions are available for you, your spouse, and your dependents. Personal exemptions may be phased out based on the amount of your adjusted gross income.

You can generally choose to take the standard deduction or to itemize deductions. Additional standard deduction amounts are available if you are blind or age 65 or older.

Itemized deductions include deductions for: medical expenses, state and local taxes, home mortgage interest, investment interest, charitable gifts, casualty and theft losses, job expenses and certain miscellaneous deductions, and other miscellaneous deductions. There is an overall limitation on itemized deductions based on the amount of your adjusted gross income.

House proposal. The standard deduction would be significantly increased, but personal and dependency exemptions would no longer be available, and additional standard deduction amounts for the blind and those over age 65 would no longer be available.

Most itemized deductions would be eliminated (or restricted).

  • The deduction for mortgage interest would still be available, but the benefit would be reduced for some individuals, and interest on home equity loans would no longer be deductible.
  • The deduction for state and local taxes would be limited to $10,000 of real property taxes (income taxes, sales taxes, and personal property taxes would not be deductible).
  • The deduction for personal casualty losses would be eliminated, except for previously granted relief for qualified victims of Hurricanes Harvey, Irma, and Maria.
  • The charitable deduction would still be available, but modified.

Senate proposal. The standard deduction would be significantly increased, and the additional standard deduction amounts for those over age 65 or blind would still be available. The personal and dependency exemptions would no longer be available.

Most itemized deductions would be eliminated (or restricted).

  • The deduction for mortgage interest would still be available, but not for home equity loans.
  • The deduction for all state and local taxes would be eliminated.
  • The deduction for personal casualty losses would be eliminated unless the loss was incurred in a federally declared disaster.
  • The charitable deduction would still be available, but modified.

Standard deduction, itemized deductions, and personal exemptions

Personal and Dependency Exemptions (you, your spouse, and dependents)
Current law House proposal Senate proposal
Exemption $4,150 No personal exemption No personal exemption

 

Standard Deduction
Current law House proposal Senate proposal
Married filing jointly $13,000 $24,400 $24,000
Head of household $9,550 $18,300 $18,000
Single/married filing separately $6,500 $12,200 $12,000
Additional aged/blind
Single/head of household $1,550 Not available $1,550
All other filing statuses $1,250 Not available $1,250

 

Itemized Deductions
Current law House proposal Senate proposal
Medical expenses Yes No No
State and local taxes Yes, income (or sales) tax, real property tax, personal property tax $10,000 of real property tax only No
Home mortgage interest Yes, limited to $1,000,000 ($100,000 for home equity loan) Yes, limited to $500,000, principal residence only, and no home equity loan Yes, but no home equity loan
Investment interest Yes No No
Charitable gifts Yes Yes, 50% AGI limit raised to 60% for certain cash gifts Yes, 50% AGI limit raised to 60% for certain cash gifts
Casualty and theft losses Yes No, but continued relief for qualified victims of Hurricanes Harvey, Irma, and Maria Federally declared disasters only
Job expenses and certain miscellaneous deductions Yes No No
Other miscellaneous deductions Yes No No

Child tax credit and new family tax credit

Current law. The maximum child tax credit is $1,000. The child tax credit is phased out if modified adjusted gross income exceeds certain amounts. If the credit exceeds the tax liability, the child tax credit is refundable up to 15% of the amount of earned income in excess of $3,000 (the earned income threshold).

House proposal. The maximum child tax credit would be increased to $1,600. A credit of $300 would be available for non-child dependents. In addition, a family flexibility credit of $300 would be available for a qualifying individual who is neither a child nor a non-child dependent. The maximum refundable amount of the credit would be $1,000, indexed for inflation. The amount at which the credit begins to phase out would be increased.

Senate proposal. The maximum child tax credit would be increased to $2,000. A nonrefundable credit of $500 would be available for non-child dependents. The maximum refundable amount of the credit would be $1,000, indexed for inflation. The amount at which the credit begins to phase out would be increased, and the earned income threshold would be lowered to $2,500.

Child Tax Credit
Current law House proposal Senate proposal
Maximum credit $1,000 $1,600 $2,000
Non-child dependents N/A $300 $500
Family flexibility N/A $300 N/A
Maximum refundable $1,000 $1,000 indexed $1,000 indexed
Refundable earned income threshold $3,000 $3,000 $2,500
Credit phaseout threshold
Single/head of household $75,000 $115,000 $500,000
Married filing jointly $110,000 $230,000 $500,000
Married filing separately $55,000 $115,000 $500,000

Alternative minimum tax

Under both the House and Senate plans, the alternative minimum tax would be eliminated.

Kiddie tax

Instead of taxing most unearned income of children at their parents’ tax rates, both the House and Senate plans would tax children’s unearned income using the trust and estate income tax brackets.

Corporate tax rates

Under both the House and Senate plans, corporate income would be taxed at a 20% rate. The House plan would make this effective starting in 2018. The Senate plan, however, would delay implementation to 2019.

Special provisions for business income of individuals

House proposal. A portion of the net income distributed by a pass-through entity (e.g., a partnership or S corporation) to an owner or shareholder would be taxed at a maximum rate of 25%. Wages and payments for services would be taxed at ordinary individual income tax rates.

Senate proposal. An individual taxpayer would be able to deduct 17.4% of domestic qualified business income (excludes compensation) from a partnership, S corporation, or sole proprietorship. The benefit of the deduction would be phased out for specified service businesses with taxable income exceeding $250,000 ($500,000 for married filing jointly). The deduction would be limited to 50% of the W-2 wages of the taxpayer. The W-2 wage limit would not apply if taxable income does not exceed $250,000 ($500,000 for married filing jointly), and the limit would be phased in for taxable income above those thresholds.

Retirement plans

Under both the House and Senate plans, the contribution levels for retirement plans would remain the same. However, it would no longer be permissible to recharacterize (or undo) a contribution or conversion to a Roth IRA.

Estate, gift, and generation-skipping transfer tax

House proposal. The gift and estate tax basic exclusion amount would be doubled to about $11,200,000 in 2018.

In 2025, the estate tax and the generation-skipping transfer tax would be repealed. In general, income tax basis would continue to be stepped-up (or stepped-down) to fair market value at death. The gift tax would remain, but the top gift tax rate would be reduced from 40% to 35%.

Senate proposal. The gift and estate tax basic exclusion amount would be doubled to about $11,200,000 in 2018.

IMPORTANT DISCLOSURES

Content has been provided by Broadridge Investor Communication Solutions, Inc.  Broadridge does not provide Investment, tax or legal advice.  The information presented here is not specific to any individual’s personal circumstances.

This publication is provided as a service to clients and associates of PFA solely for their own use and information.  The material is derived from sources believed to be reliable but its accuracy and the opinions based thereon are not guaranteed and have not been verified.  The content in this publication is for general information and education purposes only and not intended to serve as individual investment advice.  You should seek independent advice from a professional based on your individual circumstances.  The information in these materials may change at any time without notice.  To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

This communication is strictly intended for individuals residing in the state(s) of CA, FL, IL, MO and TX. No offers may be made or accepted from any resident outside the specific states referenced.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2017

Market Week: November 13, 2017

 

The Markets (as of market close November 10, 2017)

Trepidation over proposed tax reform took a toll on large caps last week, ending what had been a run of consecutive weekly positive returns. The small caps of the Russell 2000 were particularly hit, sending that index down over 1.30%. Rising oil prices pushed energy stocks higher, but not enough to offset falling stock prices across much of the market. A light economic calendar probably accounted for long-term bond yields remaining largely unchanged from the prior week.

The price of crude oil (WTI) rose to $56.86 per barrel last Friday, up from the prior week’s closing price of $55.73 per barrel. The price of gold (COMEX) climbed to $1,276.30 by early Friday evening, up from the prior week’s price of $1,270.00. The national average retail regular gasoline price increased to $2.561 per gallon on November 6, 2017, $0.073 higher than the prior week’s price and $0.328 more than a year ago.

Market/Index 2016 Close Prior Week As of 11/10 Weekly Change YTD Change
DJIA 19762.60 23539.19 23422.21 -0.50% 18.52%
Nasdaq 5383.12 6764.44 6750.94 -0.20% 25.41%
S&P 500 2238.83 2587.84 2582.30 -0.21% 15.34%
Russell 2000 1357.13 1494.91 1475.27 -1.31% 8.71%
Global Dow 2528.21 2976.80 2961.95 -0.50% 17.16%
Fed. Funds target rate 0.50%-0.75% 1.00%-1.25% 1.00%-1.25% 0 bps 50 bps
10-year Treasuries 2.44% 2.33% 2.32% -1 bps -12 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic Headlines

·         The number of job openings was little changed at 6.1 million on the last business day of September, according to the Job Openings and Labor Turnover (JOLTS) report. The number of hires fell slightly from 5.4 million in August to 5.3 million in September, while total separations remained essentially the same at 5.2 million. Job openings increased in professional and business services (+156,000), other services (+52,000), state and local government education (+36,000), and federal government (+15,000). Job openings decreased in accommodation and food services (-111,000) and information (-28,000). Over the 12 months ended in September, hires totaled 63.9 million and separations totaled 62.1 million, yielding a net employment gain of 1.8 million.

·         In the week ended November 4, the advance figure for initial claims for unemployment insurance was 239,000, an increase of 10,000 from the previous week’s level. The advance insured unemployment rate increased slightly to 1.4%. The advance number of those receiving unemployment insurance benefits during the week ended October 28 was 1,901,000, an increase of 17,000 from the previous week’s level. This remains the lowest level for insured unemployment since January 12, 1974, when it was 1,881,000.

Eye on the Week Ahead

Inflation has been moving upward, but not enough to influence the Fed to raise interest rates. This week, inflationary trackers including the Consumer Price Index and the Producer Price Index provide price information for October.

Data sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market data: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

IMPORTANT DISCLOSURES

Content has been provided by Broadridge Investor Communication Solutions, Inc.  Broadridge does not provide Investment, tax or legal advice.  The information presented here is not specific to any individual’s personal circumstances.

This publication is provided as a service to clients and associates of PFA solely for their own use and information.  The material is derived from sources believed to be reliable but its accuracy and the opinions based thereon are not guaranteed and have not been verified.  The content in this publication is for general information and education purposes only and not intended to serve as individual investment advice.  You should seek independent advice from a professional based on your individual circumstances.  The information in these materials may change at any time without notice.  To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

This communication is strictly intended for individuals residing in the state(s) of CA, FL, IL, MO and TX. No offers may be made or accepted from any resident outside the specific states referenced.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2017.