As we headed into the long holiday weekend, the markets continued to climb as tax reform moved forward.[1] For the week, the S&P 500 closed up 0.29%, the Dow rose 0.43%, and the NASDAQ gained 0.35%.[2] International stocks in the MSCI EAFE increased by 1.23%.[3]
Before leaving for his holiday vacation, President Trump signed a new tax bill and a measure to temporarily delay a possible government shutdown. Supporters of the $1.5 trillion tax cut, which dramatically reduces the corporate tax rate, believe it will encourage businesses to invest, hire more workers, and increase wages.[4] Some companies are already celebrating by offering bonuses to their employees and promising to improve infrastructure in the workplace.[5]
Tax Bill Highlights
The historic bill is the largest tax revamp in more than 30 years and makes a number of changes to the federal tax system, including:[6]
- Lowers corporate tax rate from 35% to 21%
- Offers pass-through businesses a 20% tax deduction
- Cuts top individual tax rate
- Increases standard deduction and child tax credit
- Limits state and local tax deductions[7}
Other Economic News
Though popular cryptocurrencies experienced volatility, strong economic news helped round out the week on a positive note.[8]
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Housing Picks Up: Home sales rose in November, with new home sales recording the largest jump in 25 years. Existing home sales also beat analyst forecasts and jumped to the highest rates seen during the economic expansion. The housing numbers mirror the solid, year-long market performance.[9]
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GDP Grows: We received the final reading of 3rd quarter Gross Domestic Product, which showed the economy grew 3.2% between July and September. Data suggests – thanks to a strong housing market – that 4th quarter GDP should rise by 3% as well.[10]
What’s Ahead
With consumer confidence at a 17-year high, investors remain hopeful that the markets will ring in the New Year in good shape.[11] We will see more housing news along with an update on current consumer confidence.
Over the holidays, we’ll keep tabs on the markets and look toward economic developments in 2018. As always, please contact us if you have any questions.
ECONOMIC CALENDAR
Monday: Markets Closed for Christmas Day
Wednesday: S&P CoreLogic Case-Shiller Home Price Index, Consumer Confidence, Pending Home Sales Index
Thursday: Jobless Claims
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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.
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.
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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.
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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.
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[1] www.cnbc.com/2017/12/22/us-stocks-congress-shutdown-trump-tax-bill.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/2017/12/22/trump-signs-gop-tax-plan-short-term-government-funding-bill.html
[6] www.cnbc.com/2017/12/19/us-congress-poised-to-approve-biggest-tax-overhaul-in-30-years.html
