MARKET WEEK: SEPTEMBER 18, 2017

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

Stocks followed the prior week’s plunge by surging to record highs last week. The Dow, S&P 500, and Nasdaq reached new all-time highs during the week, as each of the indexes listed here posted impressive gains. The small caps of the Russell 2000 led the way, gaining over 2.3%, followed by the Dow, S&P 500, Nasdaq, and the Global Dow. For the year, the Nasdaq still remains in the lead as it closes in on 20%.

The price of crude oil (WTI) closed at $49.83 per barrel, up from the prior week’s closing price of $47.56 per barrel. The price of gold (COMEX) fell to $1,323.50 by early Friday evening, $27.50 lower than the prior week’s price of $1,351.00. The national average retail regular gasoline price increased to $2.658 per gallon on September 11, 2017, $0.006 higher than the prior week’s price and $0.483 more than a year ago.

Market/Index 2016 Close Prior Week As of 9/15 Weekly Change YTD Change
DJIA 19762.60 21797.79 22268.34 2.16% 12.68%
Nasdaq 5383.12 6360.19 6448.47 1.39% 19.79%
S&P 500 2238.83 2461.43 2500.23 1.58% 11.68%
Russell 2000 1357.13 1399.43 1431.71 2.31% 5.50%
Global Dow 2528.21 2853.39 2890.56 1.30% 14.33%
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% 2.05% 2.20% 15 bps -24 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 lack of inflationary price pressure in the economy has persisted throughout the summer months. According to the Consumer Price Index, consumer prices rose 0.4% in August and are up 1.9% over the past 12 months. However, much of the monthly increase is attributable to a spike in energy prices, particularly gasoline, which increased 6.3% in August and has increased 10.4% over the past 12 months. The index less food and energy rose a more modest 0.2% for the month and is up 1.7% over the past 12 months. According to the report, Hurricane Harvey had a very small effect on survey response rates in August.

·         The prices producers received for goods and services increased 0.2% in August compared to July’s 0.1% decrease. For the last 12 months ended in August, producer prices have increased 2.4%. The index for producer prices less foods, energy, and trade services also increased 0.2% in August following no change in July. Over the last 12 months, producer prices less foods, energy, and trade services rose 1.9%.

·         Retail sales to consumers scaled back in August, decreasing 0.2% from the previous month. In-store sales were down 0.3%, while nonstore (online) sales were down 1.1% for the month, but are up 8.4% over the prior 12 months.

·         The federal deficit was $107.7 billion in August, an increase of $65 billion from July. Through 11 months of fiscal 2017, the total deficit sits at $674 billion — up from $619 billion over the same period last year. Compared to last year, total expenditures are up 3.1% while total receipts are ahead 1.9%.

·         Hurricane Harvey impacted industrial production in August, according to the Federal Reserve’s Industrial Production and Capacity Utilization report. Industrial production declined 0.9% in August following six consecutive monthly gains. The index for manufacturing decreased 0.3%. The manufacturing industries with the largest estimated storm-related effects were petroleum refining, organic chemicals, and plastics materials and resins. The output of mining fell 0.8% in August, as Hurricane Harvey temporarily curtailed drilling, servicing, and extraction activity for oil and natural gas. The output of utilities dropped 5.5%, as unseasonably mild temperatures, particularly on the East Coast, reduced the demand for air conditioning.

·         The Job Openings and Labor Turnover Summary for July revealed the number of job openings increased from 6.12 million in June to 6.17 million in July. The number of hires and total separations in July were little changed from the prior month. Some of the areas seeing notable job increases include transportation, warehousing, and utilities and educational services. Job openings decreased in health care and social assistance and state and local government. Over the 12 months ended in July, hires totaled 63.6 million and separations totaled 61.5 million, yielding a net employment gain of 2.1 million.

·         In the week ended September 9, the advance figure for initial claims for unemployment insurance was 284,000, a decrease of 14,000 from the previous week’s unrevised level. Hurricanes Harvey and Irma impacted this week’s initial claims. The advance insured unemployment rate remained at 1.4%. The advance number of those receiving unemployment insurance during the week ended September 2 was 1,944,000, a decrease of 7,000 from the previous week’s revised level.

Eye on the Week Ahead

The Federal Open Market Committee meets this week following a break in August. Committee members will cull a mixed bag of economic information, with job growth steady but little inflationary pressure. The FOMC may opt to leave interest rates as they are for the time being, with a possible increase in October in anticipation of more noticeable economic growth during the fall months.

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.

To opt-out of future emails, please click here.

Market Week: September 11, 2017

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

Retail gas prices surged as Hurricane Harvey forced refineries to shut down, leading to curtailed petroleum shipments. Higher gas prices cut into investors’ pockets, prompting them to move money from stocks to bonds. Each of the indexes listed here lost value last week, with the exception of the Global Dow, which posted a modest gain. Hurricanes Harvey and Irma, plus continued tensions between the United States and North Korea, didn’t help equities. The yield on 10-year Treasuries fell 11 basis points as prices rose.

The price of crude oil (WTI) closed at $47.56 per barrel, up slightly from the prior week’s closing price of $47.35 per barrel. The price of gold (COMEX) reached $1,351.00 by early Friday evening, $21.10 higher than the prior week’s price of $1,329.90. The national average retail regular gasoline price increased to $2.679 per gallon on September 4, 2017, $0.280 higher than the prior week’s price and $0.456 more than a year ago.

Market/Index 2016 Close Prior Week As of 9/8 Weekly Change YTD Change
DJIA 19762.60 21987.56 21797.79 -0.86% 10.30%
Nasdaq 5383.12 6435.33 6360.19 -1.17% 18.15%
S&P 500 2238.83 2476.55 2461.43 -0.61% 9.94%
Russell 2000 1357.13 1413.57 1399.43 -1.00% 3.12%
Global Dow 2528.21 2852.47 2853.39 0.03% 12.86%
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% 2.16% 2.05% -11 bps -39 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 Bureau of Economic Analysis releases a monthly report on the trade deficit for goods, as well as a more comprehensive report on the deficit for both goods and services. For July, the goods and services deficit was $43.7 billion, up $0.1 billion from June. July exports were $194.4 billion, $0.6 billion less than June exports. July imports were $238.1 billion, $0.4 billion less than June imports. Year-to-date, the goods and services deficit increased $27.9 billion, or 9.6%, from the same period in 2016. Examining the trade balance provides an indication of a country’s relative standing in the world economy, and affords a comparison of the prices of domestically produced goods and services to those produced in other countries.

·         A survey of the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business® shows economic activity in the non-manufacturing sector expanded in August over July. Business activity, new orders, employment, and prices all increased in August, according to the survey.

·         In the week ended September 2, the advance figure for initial claims for unemployment insurance was 298,000, an increase of 62,000 from the previous week’s revised level. This is the highest level for initial claims since April 18, 2015, when it was also 298,000. The advance insured unemployment rate remained at 1.4%. The advance number of those receiving unemployment insurance during the week ended August 26 was 1,940,000, a decrease of 5,000 from the previous week’s revised level.

Eye on the Week Ahead

Hurricane season is certainly upon us, and the financial effects of both hurricanes Harvey and Irma have been widespread. Inflation has been running cold and is not likely to pick up significantly. The latest inflationary gauges for consumer prices are out next week with reports on the Consumer Price Index, the Producer Price Index, and retail sales for August available.

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 un-managed 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.

To opt-out of future emails, please click here.

MARKET WEEK: SEPTEMBER 5, 2017

 

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

Equities were back in the black last week, with each of the indexes listed here posting end-of-week gains. The Nasdaq soared to its largest weekly gain of the year. The large caps of the Dow and S&P 500 enjoyed noticeable gains, despite last Friday’s mundane jobs report. Even the Russell 2000, which had been lagging of late, climbed over 2.50% for the week and is now 4.16% ahead of its 2016 closing value.

The price of crude oil (WTI) closed at $47.35 per barrel, down from the prior week’s closing price of $47.87 per barrel. The price of gold (COMEX) reached $1,329.90 by early Friday evening, $33.40 higher than the prior week’s price of $1,296.50. The national average retail regular gasoline price decreased to $2.399 per gallon on August 28, 2017, $0.039 lower than the prior week’s price and $0.162 more than a year ago.

Market/Index 2016 Close Prior Week As of 9/1 Weekly Change YTD Change
DJIA 19762.60 21813.67 21987.56 0.80% 11.26%
Nasdaq 5383.12 6265.64 6435.33 2.71% 19.55%
S&P 500 2238.83 2443.05 2476.55 1.37% 10.62%
Russell 2000 1357.13 1377.45 1413.57 2.62% 4.16%
Global Dow 2528.21 2834.52 2852.47 0.63% 12.83%
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% 2.17% 2.16% -1 bps -28 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 latest report on the second-quarter gross domestic product proved to be very solid, as the GDP climbed to 3.0% — 0.4 percentage point higher than the first estimate. The first-quarter GDP increased 1.2%. Economic growth was led by increases in consumer spending, nonresidential (business) fixed investment, federal government spending, and private inventory investment. Downturns occurred in residential fixed investment, state and local government spending, and a deceleration in exports. Increased consumer spending could be related to weak price inflation. How the Fed views this information when it meets later this month could go a long way in determining whether interest rates are raised.

·         The number of new hires took a step back in August with only 156,000 jobs added during the month. Job gains occurred in manufacturing, construction, professional and technical services, health care, and mining. Employment growth has averaged 176,000 per month thus far this year, down from the average monthly gain of 187,000 in 2016. The unemployment rate ticked up 0.1 percentage point to 4.4%. The labor force participation rate, at 62.9%, was unchanged in August and has shown little movement on net over the past year. The employment-population ratio, at 60.1%, was little changed over the month and thus far this year. The average workweek for all employees on private nonfarm payrolls declined by 0.1 hour to 34.4 hours in August. Average hourly earnings for all employees on private nonfarm payrolls rose by $0.03 to $26.39, after rising by $0.09 in July. Over the past 12 months, average hourly earnings have increased by $0.65, or 2.5%.

·         Consumers’ income and spending increased in July but not prices, according to the latest report from the Bureau of Economic Analysis. Personal (pre-tax) income increased $65.6 billion (0.4%) in July while disposable (after-tax) personal income (DPI) increased $39.6 billion (0.3%). Personal consumption expenditures (PCE) increased $44.7 billion (0.3%). Prices for consumer goods and services as measured by the PCE price index increased a marginal 0.1%, as did core (excluding food and energy) PCE.

·         The international trade in goods deficit expanded to $65.1 billion in July, up $1.1 billion from $64.0 billion in June. Exports of goods for July were $127.1 billion, $1.6 billion less than June exports. Imports of goods for July were $192.2 billion, $0.5 billion less than June imports.

·         According to the August survey from IHS Markit, manufacturing output was the weakest since June 2016. U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) registered 52.8 in August, down slightly from July’s reading of 53.3. Since a reading over 50 signifies growth, manufacturing output grew in August, but at a slower pace than July’s growth. The purchasing managers index from the Institute for Supply Management showed output increased last month. The August PMI® registered 58.8%, an increase of 2.5 percentage points from the July reading of 56.3%. The survey sample size for the purchasing managers’ index of the ISM is generally smaller than the one used by Markit, which may explain discrepancies between the reports.

·         The Conference Board Consumer Confidence Index® increased to 122.9 in August, up from July’s reading of 120.0. Survey respondents were bullish on current economic conditions, while their short-term expectations were tepid. The Index of Consumer Sentiment from the University of Michigan’s Surveys of Consumers increased from July’s 93.4% to 96.9% in August.

·         In the week ended August 26, the advance figure for initial claims for unemployment insurance was 236,000, an increase of 1,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 234,000 to 235,000. The advance insured unemployment rate remained at 1.4%. The advance number of those receiving unemployment insurance during the week ended August 19 was 1,942,000, a decrease of 12,000 from the previous week’s unrevised level of 1,954,000.

Eye on the Week Ahead

The Gulf region continues to recover from the effects of Hurricane Harvey. It will be several weeks before the economic impact of that devastating storm can be measured. July’s report on international trade for goods and services is out this week. Last week’s report showed that the goods trade deficit expanded in July. Despite efforts on the part of the current administration to control foreign trade, imports continue to expand at a faster rate than exports, pushing the trade deficit higher.

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: AUGUST 28, 2017

The Markets (as of market close August 25, 2017)

Amid a scarcity of economic data and the lightest trading levels of the year, stocks managed to end the week in positive territory, as measured by the indexes tracked below. The Russell 2000 was the week’s leader, notching a weekly gain of nearly 1.5%, with all other indexes posting advances of between 0.5% and 1%.

The price of crude oil (WTI) closed at $47.87 per barrel, down from the prior week’s closing price of $48.73 per barrel. The price of gold (COMEX) reached $1,296.50 by early Friday evening, $6.20 higher than the prior week’s price of $1,290.30. The national average retail regular gasoline price decreased to $2.360 per gallon on August 21, 2017, $0.024 lower than the prior week’s price and $0.167 more than a year ago.

Market/Index 2016 Close Prior Week As of 8/25 Weekly Change YTD Change
DJIA 19762.60 21674.51 21813.67 0.64% 10.38%
Nasdaq 5383.12 6216.53 6265.64 0.79% 16.39%
S&P 500 2238.83 2425.55 2443.05 0.72% 9.12%
Russell 2000 1357.13 1357.79 1377.45 1.45% 1.50%
Global Dow 2528.21 2810.24 2834.52 0.86% 12.12%
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% 2.19% 2.17% -2 bps -27 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

·         New home sales fell by a whopping 9.4% in July to a total of 571,000 (from 630,000 in June), the lowest rate in seven months, according to the U.S. Census Bureau and the Department of Housing and Urban Development. That figure is also 8.9% below the July 2016 sales figure of 627,000. The median sales price of new houses sold in July 2017 was $313,700, while the average sales price was $371,200. The seasonally adjusted estimate of new houses for sale at the end of July was 276,000. This represents a supply of 5.8 months at the current sales rate.

·         The National Association of Realtors® reported that existing home sales followed a similar trend for the same month, as large demand drops in the Northeast and Midwest outweighed increases in the South and West. Overall, total existing-home sales, which include single-family homes, townhomes, condominiums, and co-ops, fell 1.3% to a seasonally adjusted annual rate of 5.44 million in July from a downwardly revised 5.51 million in June. July’s sales pace is still 2.1% above a year ago, but is the lowest of 2017.

·         New orders for manufactured durable goods decreased $16.7 billion, or 6.8%, to $229.2 billion in July, reported the U.S. Census Bureau. This decrease, down three of the last four months, followed a 6.4% June increase. Excluding transportation, new orders increased 0.5%. Excluding defense, new orders decreased 7.8%. Transportation equipment, also down three of the last four months, drove the decrease, $17.4 billion, or 19.0%, to $74.3 billion.

·         In what could be her last appearance at the Federal Reserve’s annual retreat in Jackson Hole, Wyoming, chair Janet Yellen defended regulations enacted in the wake of the financial crisis, while noting that the Fed remains open to possible “improvements” that would help “efficiently maintain a resilient financial system.” At the same meeting, European Central Bank President Mario Draghi voiced similar sentiment. He criticized a global trend toward economic protectionism and warned that looser financial regulations could reinvigorate the types of incentive scenarios that led to the financial crisis.

·         In the week ended August 19, the advance figure for seasonally adjusted initial claims for unemployment insurance was 234,000, an increase of 2,000 from the previous week’s unrevised level. The advance seasonally adjusted insured unemployment rate was 1.4% for the week ended August 12, unchanged from the previous week’s unrevised rate. During the week ended August 12, there were 1,954,000 receiving unemployment insurance benefits, unchanged from the previous week’s revised level.

Eye on the Week Ahead

Observers will be monitoring the lingering effects of Hurricane Harvey on the Gulf region and the storm’s potential economic and market impacts, including possible increases in oil and gas prices. Other potential influences during the week will likely include the second estimate of Q2 GDP figures and the August employment figures.

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: August 21, 2017

The Markets (as of market close August 18, 2017)

Last week saw domestic and global conflicts heighten investors’ concerns, pushing stocks lower in what was a slow week for trading. The Dow lost over 270 points last Thursday, offsetting robust gains the prior Monday. The S&P 500 fell 0.65%, while the Nasdaq dropped .64% last week. Once again, the biggest fall struck the small-cap Russell 2000, which lost 1.20% for the week and is essentially at its 2016 year-end closing value, having lost all of the gains amassed during 2017. Long-term bond prices remained the same as the yield on 10-year Treasuries was unchanged from the prior week.

The price of crude oil (WTI) closed at $48.73 per barrel, down slightly from the prior week’s closing price of $48.79 per barrel. The price of gold (COMEX) closed last week at $1,290.30 by late Friday afternoon, $4.70 lower than the prior week’s price of $1,295.00. The national average retail regular gasoline price increased for the fourth week in a row to $2.384 per gallon on August 14, 2017, $0.006 higher than the prior week’s price and $0.235 more than a year ago.

Market/Index 2016 Close Prior Week As of 8/18 Weekly Change YTD Change
DJIA 19762.60 21858.32 21674.51 -0.84% 9.67%
Nasdaq 5383.12 6256.56 6216.53 -0.64% 15.48%
S&P 500 2238.83 2441.32 2425.55 -0.65% 8.34%
Russell 2000 1357.13 1374.23 1357.79 -1.20% 0.05%
Global Dow 2528.21 2821.52 2810.24 -0.40% 11.16%
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% 2.19% 2.19% 0 bps -25 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 volume of retail and food services sales picked up in July, increasing 0.6% over June’s sales figures. Sales were 4.2% above July 2016. Sectors whose sales expanded in July included motor vehicle and parts dealers (1.2%); building materials and garden equipment and supplies dealers (1.2%); and online retailers (1.3%).

·         The dollar is declining in value, which is good news for exporters but not so good for importers. July’s import and export prices report shows that both import and export prices increased over the prior month. Import prices increased 0.1% as petroleum imports jumped 0.7%. Export prices climbed 0.4% following a -0.2% fall in June. Export prices were helped by a 2.1% spike in prices for agricultural products.

·         The momentum created in June for new home construction did not carry over to July. According to the latest figures from the Census Bureau, building permits (-4.1%), housing starts (-4.8%), and housing completions (-6.2%) each decreased from their respective June rates. A slowdown in home building will not help an already dwindling supply and could prove to be a drag on overall economic growth.

·         According to the latest report from the Federal Reserve, industrial production rose 0.2% in July following an increase of 0.4% in June. Overall, total industrial production was 2.2% above its year-earlier level. In July, manufacturing output edged down 0.1%; the production of motor vehicles and parts fell substantially, but that decrease was mostly offset by a net gain of 0.2% for other manufacturing industries. The indexes for mining and utilities in July rose 0.5% and 1.6%, respectively.

·         In the week ended August 12, the advance figure for seasonally adjusted initial claims for unemployment insurance was 232,000, a decrease of 12,000 from the previous week’s unrevised level. The advance seasonally adjusted insured unemployment rate remained 1.4%, unchanged from the previous week’s unrevised rate. During the week ended August 5, there were 1,953,000 receiving unemployment insurance benefits, a decrease of 3,000 from the previous week’s revised level. The previous week’s level was revised up 5,000 from 1,951,000 to 1,956,000.

Eye on the Week Ahead

Stocks were unable to shake a recent slump last week. A week without violence would go a long way toward quelling investor concerns and pushing equities higher. On the economic front, the housing sector is an important gauge of economic momentum. In the first quarter, sales of new and existing homes were robust. However, lack of inventory and rising prices have stymied sales during the second quarter. High demand for housing may be a sign that people are comfortable enough with their financial situation to make a large purchase. However, the lack of inventory means builders can’t keep up with the demand for new housing, and home owners aren’t inclined to sell their current homes. This week’s reports on sales of new and existing homes in July may shed some light on whether sales are picking up or lagging.

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.

MARKET COMMENTARY: AUGUST 14, 2017

 

The Markets (as of market close August 11, 2017)

Investors may have been disturbed by the rising tensions between the United States and North Korea last week, resulting in a shift from stocks to long-term bonds. The Dow, which had surged to a new record high the prior week, sunk over 1.0% last week, while the large-cap S&P 500 fell almost 1.5% following some less than stellar second-quarter corporate earnings reports. Once again, the biggest drop was felt by the small-cap Russell 2000, which suffered the largest weekly decline of the indexes listed here, and has lost most of its year-to-date gains. On the other hand, demand for 10-year Treasuries increased, sending yields to their lowest level since June.

The price of crude oil (WTI) closed at $48.79 per barrel, down from the prior week’s closing price of $49.52 per barrel. The price of gold (COMEX) closed last week at $1,295.00 by late Friday afternoon, $30.70 higher than the prior week’s price of $1,264.30. The national average retail regular gasoline price increased to $2.378 per gallon on August 7, 2017, $0.026 higher than the prior week’s price and $0.228 more than a year ago.

Market/Index 2016 Close Prior Week As of 8/11 Weekly Change YTD Change
DJIA 19762.60 22092.81 21858.32 -1.06% 10.60%
Nasdaq 5383.12 6351.56 6256.56 -1.50% 16.23%
S&P 500 2238.83 2476.83 2441.32 -1.43% 9.04%
Russell 2000 1357.13 1412.32 1374.23 -2.70% 1.26%
Global Dow 2528.21 2870.04 2821.52 -1.69% 11.60%
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% 2.26% 2.19% -7 bps -25 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 Job Openings and Labor Turnover report for June, the number of job openings increased to 6.2 million (+461,000). Over the month, the number of hires fell from 5.5 million in May to 5.4 million in June. There were 5.2 million total separations in June, little changed from May. Job openings increased in a number of industries, with the largest increases occurring in professional and business services (+179,000), health care and social assistance (+125,000), and construction (+62,000).

·         The monthly federal government budget deficit was $43 billion in July on the heels of a June deficit of $90 billion. Total government receipts were $232 million, while total outlays were $275 million. The total budget deficit for fiscal 2017 sits at $566 billion — 10.6% higher than the $512 billion deficit over the same 10-month period last year.

·         There continues to be little upward movement in consumer prices. The Consumer Price Index rose 0.1% in July following no movement in June and a 0.1% drop in May. The CPI has risen 1.7% over the last 12 months ended in July. Prices less food and energy also increased 0.1% for the month and 1.7% over the last 12 months.

·         Dwindling inflationary pressure has been the theme over much of 2017, and the latest figures from the Producer Price Index continue that trend. The prices producers receive for their goods and services declined 0.1% in July, following a 0.1% increase in June. Over 80% of the decrease is attributable to a 0.2% drop in services, although prices for goods edged down 0.1%. Prices less the volatile components of food, energy, and trade services were unchanged in July, while prices less food and energy fell 0.1%.

·         In the week ended August 5, the advance figure for seasonally adjusted initial claims for unemployment insurance was 244,000, an increase of 3,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 240,000 to 241,000. The advance seasonally adjusted insured unemployment rate remained 1.4%, unchanged from the previous week’s unrevised rate. During the week ended July 29, there were 1,951,000 receiving unemployment insurance benefits, a decrease of 16,000 from the previous week’s revised level. The previous week’s level was revised down 1,000 from 1,968,000 to 1,967,000.

Eye on the Week Ahead

July’s report on housing starts is out this week. The housing market has been up and down so far this year, with low inventory and rising prices discouraging would-be home shoppers. However, housing starts and building permits were up in June — a trend builders and homebuyers would like to see continue in July. Another report released this week, the Treasury’s Industrial Production Index, not only shows how much factories are producing, but it also measures how much factory capacity is in use.

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.

MARKET COMMENTARY: AUGUST 7, 2017

 
 

The Markets (as of market close August 4, 2017)

Last week ended with a mixed bag of stock market performances. The Dow, influenced by a favorable jobs report and strong corporate quarterly earnings, surged to a new record high. The S&P 500 also ended last week in positive territory. Tech stocks did not fare as well as the large caps, pushing the Nasdaq to its second straight week of negative returns. But the worst performance befell the Russell 2000, which plummeted about 1.20% for the week, after falling nearly 0.50% the prior week. Long-term Treasury yields rose last week as prices dropped.

The price of crude oil (WTI) closed at $49.52 per barrel, down slightly from the prior week’s closing price of $49.79 per barrel. The price of gold (COMEX) closed last week at $1,264.30 by late Friday afternoon, $11.30 below the prior week’s price of $1,275.60. The national average retail regular gasoline price increased to $2.352 per gallon on July 31, 2017, $0.040 higher than the previous week’s price and $0.193 higher than a year ago.

Market/Index 2016 Close Prior Week As of 8/4 Weekly Change YTD Change
DJIA 19762.60 21830.31 22092.81 1.20% 11.79%
Nasdaq 5383.12 6374.68 6351.56 -0.36% 17.99%
S&P 500 2238.83 2472.10 2476.83 0.19% 10.63%
Russell 2000 1357.13 1429.26 1412.32 -1.19% 4.07%
Global Dow 2528.21 2849.54 2870.04 0.72% 13.52%
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% 2.29% 2.26% -3 bps -18 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

·         Another strong month of growth in the employment sector as there were 209,000 new jobs added in July. This follows the 231,000 new jobs added in June. Employment growth has averaged 184,000 per month thus far this year. Job gains occurred in food services and drinking places, professional and business services, and health care. The unemployment rate for the month was 4.3%, down from 4.4% in June. The average workweek was unchanged at 34.5 hours in July. Average hourly earnings rose by $0.09 to $26.36 in July. Over the year, average hourly earnings have risen by $0.65, or 2.5%.

·         Not unexpectedly, growth in consumer income and spending was essentially nonexistent in June. Pre-tax personal income and after-tax personal income were unchanged in June from May. Consumer spending, as measured by personal consumption expenditures (PCE), increased 0.1% in June. Core personal consumption expenditures (excluding food and energy) also increased 0.1% for the month. For the 12 months ended in June, the PCE was up 1.4%, while the core PCE has gained 1.5%. This report confirms that, entering the summer months, inflation is relatively flat and consumers are not seeing an increase in their income. Consumer spending, which accounts for roughly two-thirds of overall economic activity, has also stagnated.

·         The final report on the international trade in goods and services deficit for June showed the total trade deficit to be $43.6 billion, down $2.7 billion from May. June exports were $194.4 billion, $2.4 billion more than May exports. June imports were $238.0 billion, $0.4 billion less than May imports. Year-to-date, the goods and services deficit increased $26.7 billion, or 10.7%, from the same period in 2016.

·         The purchasing managers’ index is a survey of selected companies relative to manufacturing output, new orders, inventory, employment, and prices. IHS Markit and the Institute for Supply Management (ISM) each put out a monthly index. The results of each survey are not always similar, as is the case for July. Markit’s U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) registered 53.3 in July, up from 52.0 in June, indicating an increase in production. On the other hand, the ISM purchasing managers’ index was 56.3%, down 1.5 percentage points from the June reading of 57.8%. It should be noted that a reading over 50% indicates growth, which means manufacturing expanded in July according to the ISM report, but at a slower pace than June.

·         According to the Institute for Supply Management’s Non-Manufacturing ISM® Report On Business®, the non-manufacturing index slipped 3.5 percentage points in July to 53.9%. This represents continued growth in the non-manufacturing sector, but at a slower rate than in June. Survey respondents thought business activity, new orders, and employment decelerated while prices increased in July from June. The report covers industries such as accommodation and food services; utilities; wholesale and retail trade; real estate, rental, and leasing; health care and social assistance; and finance and insurance.

·         In the week ended July 29, the advance figure for seasonally adjusted initial claims for unemployment insurance was 240,000, a decrease of 5,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 244,000 to 245,000. The advance seasonally adjusted insured unemployment rate remained 1.4%, unchanged from the previous week’s unrevised rate. During the week ended July 22, there were 1,968,000 receiving unemployment insurance benefits, an increase of 3,000 from the previous week’s revised level. The previous week’s level was revised up 1,000 from 1,964,000 to 1,965,000.

Eye on the Week Ahead

Trading should continue to be light as the summer rolls on. Both producer prices and consumer prices showed little upward movement in June. July’s figures are not expected to change that much as reports on the Producer Price Index and the Consumer Price Index are out this week.

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.

MARKET COMMENTARY: July 31, 2017

The Markets (as of market close July 28, 2017)

Of the benchmark indexes listed here, only the Dow and the Global Dow posted gains last week. The remaining indexes closed the week modestly lower, despite a rise in energy stocks following Saudi Arabia’s promise to cut back oil production. Technology shares fell, which hampered both the Nasdaq and S&P 500. Quarterly earnings reports from large U.S. companies contributed to the Dow’s gains last week. While the Federal Reserve held interest rates at their current levels, it did reveal its intention to reduce its holdings of mortgage-backed securities and Treasuries relatively soon, which could push long-term interest rates higher.

The price of crude oil (WTI) closed at $49.79 per barrel, up from the prior week’s closing price of $45.60 per barrel. The price of gold (COMEX) closed last week at $1,275.60 by late Friday afternoon, $14.50 ahead of the prior week’s price of $1,261.10. The national average retail regular gasoline price rose to $2.312 per gallon on July 24, 2017, $0.034 higher than the previous week’s price and $0.130 higher than a year ago.

Market/Index 2016 Close Prior Week As of 7/28 Weekly Change YTD Change
DJIA 19762.60 21580.07 21830.31 1.16% 10.46%
Nasdaq 5383.12 6387.75 6374.68 -0.20% 18.42%
S&P 500 2238.83 2472.54 2472.10 -0.02% 10.42%
Russell 2000 1357.13 1435.84 1429.26 -0.46% 5.31%
Global Dow 2528.21 2833.20 2849.54 0.58% 12.71%
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% 2.23% 2.29% 6 bps -15 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

·         Slowing inflation was the primary reason the Federal Open Market Committee decided to keep the target range for the federal funds rate at its current 1.00%-1.25% range following last week’s meeting. The Committee noted that the labor market has continued to strengthen and household spending and business fixed investment have continued to expand. However, overall inflation has declined, while wage inflation has remained low. The FOMC does not meet again until September.

·         The initial (advance) estimate of the gross domestic product showed the second-quarter economy grew at a healthy annual rate of 2.6%. In the first quarter, the GDP increased 1.2%. The acceleration in GDP growth in the second quarter reflected a smaller decrease in private inventory investment, an acceleration in personal consumption expenditures, and an upturn in federal government spending. These movements were partly offset by a downturn in residential fixed investment and decelerations in exports and in nonresidential fixed investment. Disposable personal income increased $122.1 billion, or 3.5%, in the second quarter, compared with an increase of $176.3 billion, or 5.1%, in the first quarter (revised). It’s important to note that the initial estimate of the GDP is based on source data that is incomplete and subject to revision.

·         Good news for domestic manufacturers as new orders for long-lasting goods increased $14.9 billion, or 6.5%, in June. This increase follows two consecutive monthly decreases. However, the gain in new orders is attributable, in large part, to transportation, particularly aircraft. New orders excluding transportation increased only 0.2%. Shipments of manufactured durable goods in June, down three of the last four months, decreased $0.1 billion to $236.0 billion. This followed a 1.2% May increase. Unfilled orders for manufactured durable goods in June, up three of the last four months, increased $14.2 billion, or 1.3%, to $1,135.6 billion. This followed a 0.1% May decrease. Inventories continued to build, increasing $1.6 billion, or 0.4%.

·         Following a surge in May, sales of existing homes fell 1.8% in June. Despite last month’s decline, June’s sales pace (5.52 million) is 0.7% above a year ago, but is the second lowest of 2017 (February, 5.47 million). The demand for existing housing remains strong, but a dearth of supply and climbing prices have kept interested buyers at bay. Total housing inventory at the end of June declined 0.5% to 1.96 million existing homes available for sale — 7.1% lower than a year ago. Unsold inventory is at a 4.3-month supply at the current sales pace, which is down from 4.6 months a year ago. The median existing-home price for all housing types (single family, condos, townhouses, and co-ops) in June was $263,800, up 6.5% from June 2016 ($247,600). June’s median sales price surpassed May as the new peak after registering the 64th straight month of year-over-year gains.

·         Sales of new single-family homes were only marginally better in June than existing home sales. New single-family home sales were at a seasonally adjusted annual rate of 610,000 — 0.8% above the revised May rate of 605,000 and 9.1% above the June 2016 estimate of 559,000. The median and average sales prices decreased in June from May. The median sales price of new homes sold was $310,800 ($324,300 in May). The average sales price was $379,500 ($381,400 in May). The seasonally adjusted estimate of new houses for sale at the end of June was 272,000, which represents a supply of 5.4 months at the current sales rate.

·         The trade deficit decreased in June. The international trade deficit was $63.9 billion in June, down $2.5 billion from May. Exports of goods for June were $128.6 billion, $1.8 billion more than May exports. Imports of goods for June were $192.4 billion, $0.7 billion less than May imports.

·         The Conference Board Consumer Confidence Index® rose to 121.1 in July, up from 117.3 in June. Surveyed consumers expressed growing optimism in the present state of the economy and the short-term outlook. On the other hand, the University of Michigan’s Surveys of Consumers had consumer sentiment fall from 95.1 in June to 93.4 in July. This is still 3.8% higher than the reading from July 2016. Survey respondents were bullish about current economic conditions, but not so optimistic concerning future prospects for the economy.

·         In the week ended July 22, the advance figure for seasonally adjusted initial claims for unemployment insurance was 244,000, an increase of 10,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 233,000 to 234,000. The advance seasonally adjusted insured unemployment rate remained 1.4%, unchanged from the previous week’s unrevised rate. During the week ended July 15, there were 1,964,000 receiving unemployment insurance benefits, a decrease of 13,000 from the previous week’s unrevised level.

Eye on the Week Ahead

Two important economic reports are out this week: personal income and outlays and the employment situation. The FOMC relies on the price index of the personal income and outlays report as an indicator of inflationary trends. On the employment front, June’s report was mixed — as new hires increased, while wage growth was marginal at best. July’s employment report is not expected to change much.

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.

Market Commentary: July 24, 2017

 
 

The Markets (as of market close July 21, 2017)

Except for the Dow, each of the indexes listed here posted modest gains by the close of last week. Favorable corporate earnings reports helped boost the S&P 500 and the Nasdaq, which performed the best. The Russell 2000 gained almost 0.50% and the Global Dow inched ahead a little over 0.1%. Year-to-date, the tech-heavy Nasdaq leads the way as it surges toward a 20.0% gain, followed by the Global Dow, the S&P 500, the Dow, and the Russell 2000. Low inflation may be influencing investors to move away from Treasuries, as yields fell sharply last week. A midweek push in oil prices wasn’t enough to keep them from closing the week below $46 per barrel.

The price of crude oil (WTI) closed at $45.60 per barrel, down from the prior week’s closing price of $46.68 per barrel. The price of gold (COMEX) closed last week at $1,261.10 by late Friday afternoon, $33.10 ahead of the prior week’s price of $1,228.00. The national average retail regular gasoline price decreased to $2.278 per gallon on July 17, 2017, $0.019 lower than the previous week’s price, but $0.048 higher than a year ago.

Market/Index 2016 Close Prior Week As of 7/21 Weekly Change YTD Change
DJIA 19762.60 21637.74 21580.07 -0.27% 9.20%
Nasdaq 5383.12 6312.47 6387.75 1.19% 18.66%
S&P 500 2238.83 2459.27 2472.54 0.54% 10.44%
Russell 2000 1357.13 1428.82 1435.84 0.49% 5.80%
Global Dow 2528.21 2829.44 2833.20 0.13% 12.06%
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% 2.23% -10 bps -21 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

·         Fluctuations in import and export prices provide a useful gauge of inflationary trends both domestically and abroad. In June, import and export prices declined 0.2%, respectively. Over the last 12 months, import prices have risen 1.5%, while export prices have increased 0.6% over the same period. This report is in line with other inflationary indicators, which show that price growth has stagnated during the second quarter of the year.

·         The beginning of summer has seen new residential construction gain momentum following a lackluster spring. For June, the number of housing starts (residential construction that’s begun) jumped 8.3% over May, the number of building permits issued increased by 7.4%, and housing completions advanced 5.2%.

·         In the week ended July 15, the advance figure for seasonally adjusted initial claims for unemployment insurance was 233,000, a decrease of 15,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 247,000 to 248,000. The advance seasonally adjusted insured unemployment rate remained 1.4%, unchanged from the previous week’s unrevised rate. During the week ended July 8, there were 1,977,000 receiving unemployment insurance benefits, an increase of 28,000 from the previous week’s revised level. The previous week’s level was revised up by 4,000 from 1,945,000 to 1,949,000.

Eye on the Week Ahead

The FOMC meets this week; however it is not expected that the Committee will increase interest rates at this meeting. The FOMC next meets at the end of September. The latest economic information on the second-quarter GDP is released at the end of this week. According to the first report for the second quarter, the economy slowed compared to the first quarter — advancing at a rate of 1.4%. Reports for new and existing home sales for June are also available this week. Existing home sales climbed 1.1% in May, while new home sales advanced 2.9%.

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.

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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.

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The Markets: (As of Close July 14, 2017)

Both the Dow and S&P 500 reached record highs last week, and each of the indexes listed here posted gains. While the large-cap indexes reached new highs, the tech-heavy Nasdaq had the best week, climbing over 2.50% by last week’s end, followed by the Global Dow, which gained a little over 2.0%. With consumer prices holding steady inflation appears to be stagnant, which bodes well for the Fed holding interest rates at their current level. This may have prompted investors to sell long-term bonds as prices dropped, hiking yields higher.

The price of crude oil (WTI) closed at $46.68 per barrel, up from the prior week’s closing price of $44.30 per barrel. The price of gold (COMEX) closed last week at $1,228.00 by late Friday afternoon, $16.00 ahead of the prior week’s price of $1,212.00. The national average retail regular gasoline price increased to $2.297 per gallon on July 10, 2017, $0.037 higher than the previous week’s price and $0.044 higher than a year ago.

Market/Index 2016 Close Prior Week As of 7/14 Weekly Change YTD Change
DJIA 19762.60 21414.34 21637.74 1.04% 9.49%
Nasdaq 5383.12 6153.08 6312.47 2.59% 17.26%
S&P 500 2238.83 2425.18 2459.27 1.41% 9.85%
Russell 2000 1357.13 1415.84 1428.82 0.92% 5.28%
Global Dow 2528.21 2772.66 2829.44 2.05% 11.91%
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% 2.38% 2.33% -5 bps -11 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

  • In a sign that inflation is weakening, the prices consumers pay for goods and services, as measured by the Consumer Price Index, were unchanged in June compared to May. Over the last 12 months, consumer prices have increased 1.6%. The core CPI, less volatile food and energy prices, managed a subtle 0.1% bump for the month, while increasing 1.7% since June 2016. If expanding inflation is one of the key justifications used by the Fed in raising interest rates, this report makes it likely that rates will not be increased when the FOMC next meets at the end of July.
  • The prices producers received for their goods and services (as measured by the Producer Price Index) increased by 0.1% in June. Producer prices were unchanged in May and rose 0.5% in April. Over the 12 months ended in June, producer prices have advanced 2.0%. Almost 80% of the June rise in prices was attributable to a 0.2% increase in prices for services. Food prices rose 0.6%, while energy prices dipped 0.5%. Producer prices less the volatile food, energy, and trade services components increased 0.2% for the month, and 2.0% for the 12 months ended in June. Since increases in prices at the producer level are usually passed on to consumers, investors may seek to monitor the Producer Price Index to get a potential read on inflationary trends. Theoretically, with no real increase in prices, more money should be available for investment.
  • Retail sales fell 0.2% in June following a 0.1% decline in May, indicating consumers have apparently curtailed their spending. Sales at food and beverage stores fell 0.4%, restaurant sales dropped 0.6%, department store sales were down 0.7%, and gasoline sales plummeted 1.3% — a reflection of weakening prices at the pumps.
  • The federal deficit expanded in June to $90.23 billion compared to May’s monthly deficit of $88.42 billion. For the fiscal year, which began in October, the deficit sits at $523.08 billion. Over the same nine months last fiscal year, the deficit was $399.16 billion. An expanding deficit has a direct impact on the yields on government securities, which the government sells to provide necessary funds to meet its expenses. The more government notes and bonds that are issued, the lower the price and higher the yield. The yield on government securities can impact other interest bearing securities as well.
  • According to the Federal Reserve’s monthly report, industrial production rose 0.4% in June for its fifth consecutive monthly increase. Manufacturing output moved up 0.2%. The index for mining posted a gain of 1.6% in June, just slightly below its pace in May. The index for utilities, however, remained unchanged. For the second quarter as a whole, industrial production advanced at an annual rate of 4.7%, primarily as a result of strong increases for mining and utilities. Manufacturing output rose at an annual rate of 1.4%, a slightly slower increase than in the first quarter.
  • According to the latest Job Openings and Labor Turnover report from the Bureau of Labor Statistics, the number of job openings decreased to 5.7 million (-301,000) on the last business day of May. Over the month, hires increased to 5.5 million (+429,000) and separations increased to 5.3 million (+251,000). Within separations, the quits rate increased 0.1 percentage point to 2.2% and the layoffs and discharges rate was unchanged at 1.1%. Over the 12 months ended in May, hires totaled 63.2 million and separations totaled 60.9 million, yielding a net employment gain of 2.4 million. The JOLTS report differs from the more current employment situation report by providing specific information on job openings, hires, and separations.
  • In the week ended July 8, the advance figure for seasonally adjusted initial claims for unemployment insurance was 247,000, a decrease of 3,000 from the previous week’s revised level. The previous week’s level was revised up by 2,000 from 248,000 to 250,000. The advance seasonally adjusted insured unemployment rate remained 1.4% for the week ended July 1, unchanged from the previous week’s unrevised rate. During the week ended July 1, there were 1,945,000 receiving unemployment insurance benefits, a decrease of 20,000 from the previous week’s revised level. The previous week’s level was revised up by 9,000 from 1,956,000 to 1,965,000.

Eye on the Week Ahead

There isn’t much available in terms of economic indicators this week. One report worth noting focuses on import and export prices in June. An indicator of inflation in products traded globally, the Import and Export Price Indexes impacts bond prices and equity markets, particularly when importing inflation rises, which often leads to bond and stock prices decreasing.

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.