Markets rebounded last week, posting sizable gains and moving back into positive territory for the year. All three domestic indexes experienced their largest weekly growth in years, despite losing some ground on Friday after news of additional indictments in the Russia investigation.[1]
By markets’ close on February 16, the S&P 500 added 4.30%, the Dow was up 4.25%, and the NASDAQ increased 5.31%.[2] International stocks in the MSCI EAFE also gained 4.18% for the week.[3]
This performance, however, did not come from simple, straightforward increases. Instead, the volatility from recent weeks continued. In fact, the S&P 500 lost or gained at least 1% on 8 of the past 10 trading days. The index only experienced that movement level 8 times throughout 2017.[4]
Key Economic Findings
We received a wealth of data last week, and the readings helped deepen our understanding of the economy. The reports showed some mixed results, but much of the information continues to indicate that the economy is on solid ground.[5]
January Highlights
- Housing starts jumped 9.7%, beating expectations and reaching the 2nd-fastest rate since the recession. Even with mortgage rates increasing and tax reform affecting some buyers’ mortgage interest deductions, the data shows positive news for future homebuilding as well.
- Consumer price index increased 0.5%, rising 2.1% in the past year. This reading indicates that prices are continuing to rise faster than the Federal Reserve’s target rate.[6]
- Retail sales fell, dropping 0.3% in part due to slow motor vehicle sales. In addition, negative updates to December’s readings could affect 4th-quarter Gross Domestic Product results.[7]
February Highlights
- Consumer sentiment beat expectations, coming in at 99.9 – its 2nd-highest reading in 14 years. The movement came as tax-cut optimism outweighed stock-market concerns.[8] [dt_gap height=”5″ /]
The Takeaway
Many reports show that the economy is strong, so watching for inflation will remain important as the markets keep moving. The combination of growing inflation and a strong labor market means the Fed is still likely to hike rates 3 times this year, with a 4th increase very possible.[9]
Looking ahead, volatility may continue, so keep this on your radar. Investors caught between conflicting concerns about missing the bull market and losing money may contribute to ongoing uncertainty.[10] Remember, stock fluctuations are normal. We are here to help you understand what’s happening in the markets and how to position yourself for the financial life you desire.[dt_gap height=”5″ /]
ECONOMIC CALENDAR
Monday: U.S. Markets Closed for Presidents’ Day
Wednesday: Existing Home Sales
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.
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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 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 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.
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[1] www.cnbc.com/2018/02/16/us-stocks-strong-week-volatility-rates.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/2018/02/16/us-stocks-strong-week-volatility-rates.html
[6] www.marketwatch.com/story/cpi-surges-05-in-january-but-yearly-rate-of-inflation-unchanged-2018-02-14
[7] wsj-us.econoday.com/byshoweventfull.asp?fid=485748&cust=wsj-us&year=2018&lid=0&prev=/byweek.asp#top
[8] wsj-us.econoday.com/byshoweventfull.asp?fid=485844&cust=wsj-us&year=2018&lid=0&prev=/byweek.asp#top
[9] www.ftportfolios.com/blogs/EconBlog/2018/2/14/the-consumer-price-index-rose-0.5percent-in-january
[10] www.cnbc.com/2018/02/16/us-stocks-strong-week-volatility-rates.html
