November 20, 2017 – Stocks Mixed, Data Up

Nov 20, 2017

Domestic stock performance varied last week, with the S&P 500 and Dow losing ground for the 2nd straight week, while the NASDAQ posted gains.[1] By Friday, the S&P 500 had dropped 0.13%, the Dow gave back 0.27%, and the NASDAQ gained 0.47%.[2] International stocks in the MSCI EAFE stumbled, dropping 0.67%.[3]

Tax reform remained a key focus in the markets, as investors questioned whether changes will happen by the end of 2017. The markets have largely priced in expectations that tax reform will move forward, a belief that has helped drive this year’s record prices. Treasury Secretary Mnuchin expects the President to receive a bill by Christmas, but despite his update, concerns about meeting this deadline remain. This uncertainty – combined with questions about differences between the House and Senate plans – has contributed to the market volatility we’ve seen in recent weeks.[4]

While tax reform may be impacting stocks right now, going beyond the geopolitical debate reveals various positive economic updates.

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An Overview of Last Week’s Economic Insight

From housing to industrial production, last week gave us a variety of economic updates for October. Overall, the data indicates that the economy is on solid ground.

    • Retail sales grew
      Hurricanes are still affecting retail sales, but October’s reading shows decent performance – and analysts expect the holiday season to drive strong results through year’s end.[5]
    • Consumer prices increased slightly
      Inflation remains relatively low and slow, yet this month’s report shows it moving in the right direction toward the Fed’s goal of a 2% level.[6]
    • Industrial production surged
      A large jump in manufacturing helped drive industrial growth and indicates a strengthening sector – good news for our economy.[7]
    • Housing starts beat expectations
      The housing industry experienced strong growth in new permits, construction starts, and completed homes.[8]
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What Is Ahead

Tax reform will likely continue to be a hot topic in Washington and the markets. We will follow any changes or updates as they occur, and understanding the economy’s underlying strength will remain our key focus.As a reminder, with Thanksgiving on Thursday, the markets will only be open for 4 days this week. During this season of gratefulness, we want to thank you for your ongoing trust and reinforce that we are always here to support you on your financial journey.

ECONOMIC CALENDAR
Tuesday: Existing Home Sales
Wednesday: Durable Goods Orders, Consumer Sentiment
Thursday: Markets Closed for Thanksgiving
Friday: PMI Composite Flash

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Notes: All index returns (except S&P 500) exclude reinvested dividends, and the 5- year and 10-year returns are annualized. The total returns for the S&P 500 assume reinvestment of dividends on the last day of the month. This may account for differences between the index returns published on Morningstar.com and the index returns published elsewhere. International performance is represented by the MSCI EAFE Index. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.

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Diversification does not guarantee profit nor is it guaranteed to protect assets.

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The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.

The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.

The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indices from Europe, Australia and Southeast Asia.

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  1. www.cnbc.com/2017/11/17/us-stocks-tax-reform-mnuchin.html
  2. http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX®ion=usa&culture=en-US, http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO
  3. https://www.msci.com/end-of-day-data-search
  4. www.cnbc.com/2017/11/17/us-stocks-tax-reform-mnuchin.html
  5. wsj-us.econoday.com/byshoweventfull.asp?fid=477717&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
  6. wsj-us.econoday.com/byshoweventfull.asp?fid=477400&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
  7. wsj-us.econoday.com/byshoweventfull.asp?fid=477833&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
  8. wsj-us.econoday.com/byshoweventfull.asp?fid=477693&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top

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