Domestic markets were up last week as tax reform became more likely. On Friday, multiple previously undecided Senators announced they would back the combined House and Senate bill, and stocks reacted by hitting new record highs.[1] For the week, the S&P 500 gained 0.92%, the Dow added 1.33%, and the NASDAQ grew by 1.41%.[2] International stocks in the MSCI EAFE increased 0.13%.[3]
The House and Senate may vote on the tax plan this week, and if it passes, a number of changes will be on the horizon. In particular, the corporate tax rate would drop from 35% to 21% in 2018. Anticipation of this change has contributed to the many record highs we’ve seen in the domestic markets this year.[4]
However, while tax reform was a major topic last week, we also received a number of other economic updates. Two key events are worth noting: increasing interest rates and soaring retail sales.
- The Federal Reserve Raised Rates
The Fed increased the benchmark interest rate for the third time this year, raising it a quarter percent to be between 1.25% and 1.5%. Credit cards, home equity lines of credit, and adjustable-rate mortgages could all become more expensive as a result of the latest increase.[5] - Retail Sales Soared
Consumer spending was far higher than expected in November, growing 0.8% over the previous month’s numbers. This increase could contribute to strong economic growth in the fourth quarter.[6]
Together, this week’s market performance and economic updates may paint a picture of a healthy end to a year of significant growth. We will continue to monitor both geopolitical developments and economic data as they emerge. We look forward to seeing what is on the horizon for the rest of 2017 – and for the year ahead. As always, if you have any questions, we’re here to talk.
[dt_gap height=”10″ /]
ECONOMIC CALENDAR
Monday: Housing Market Index
Tuesday: Housing Starts
Wednesday: Existing Home Sales
Thursday: GDP,Jobless Claims
Friday: Durable Goods Orders, New Home Sales, Consumer Sentiment
[dt_divider style=”thick” /]
[dt_divider style=”thick” /]
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.
[dt_gap height=”10″ /]
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
Investment advisory services and insurance services are provided through The Retirement Solution Inc. a Registered Investment Advisor.
Any economic and/or performance information cited is historical and not indicative of future results. The Retirement Solution Inc. is an investment advisor registered in each state The Retirement Solution Inc. maintains client relationships.
Diversification does not guarantee profit nor is it guaranteed to protect assets.
International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.
The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
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.
The S&P/Case-Shiller Home Price Indices are the leading measures of U.S. residential real estate prices, tracking changes in the value of residential real estate. The index is made up of measures of real estate prices in 20 cities and weighted to produce the index.
The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Past performance does not guarantee future results.
You cannot invest directly in an index.
Consult your financial professional before making any investment decision.
Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.
These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative, Broker dealer or Investment Advisor, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.
By clicking on these links, you will leave our server, as they are located on another server. We have not independently verified the information available through this link. The link is provided to you as a matter of interest. Please click on the links below to leave and proceed to the selected site.
[1] www.cnbc.com/2017/12/15/us-stocks-tax-bill-congress.html
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO
[3] www.msci.com/end-of-day-data-search
[4] www.cnbc.com/2017/12/15/us-stocks-tax-bill-congress.html
[6] wsj-us.econoday.com/byshoweventfull.asp?fid=477718&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
