Presented by Mark Gallagher
General market news
• The 10-year Treasury yield continued its sharp move lower last week, opening this Monday morning at 2.34 percent, its lowest level in almost four weeks. It had been at 2.62 percent less than two weeks ago. The 30-year Treasury yield, which had been as high as 3.21 percent two weeks ago, opened Monday morning at 2.95 percent.
• All three major U.S. indices were down by more than 1 percent last week, the largest decline since the beginning of November. Only the utilities and real estate sectors remained positive on the week, while financials, telecom, and industrials led the move down.
• The market dropped after Congress canceled its vote on the American Health Care Act. The failure to repeal and replace the Affordable Care Act has many questioning whether the new administration will face other hurdles as it attempts to make its proposed policy changes. In other news, British Prime Minister Theresa May set March 29 as the date to trigger Brexit and begin the process of leaving the EU.
• Only a handful of important economic data points were released last week. Existing home sales came in lower than expected, though the decline was likely due in large part to a lack of supply rather than lower demand. New home sales beat expectations, however. The week ended with a durable goods orders report that beat expectations, as businesses continue to invest.
| Equity Index | Week-to-Date | Month-to-Date | Year-to-Date | 12-Month |
| S&P 500 | –1.42% | –0.70% | 5.20% | 17.61% |
| Nasdaq Composite | –1.22% | 0.12% | 8.56% | 23.60% |
| DJIA | –1.52% | –0.91% | 4.85% | 20.68% |
| MSCI EAFE | –0.04% | 2.82% | 7.33% | 14.71% |
| MSCI Emerging Markets | 0.42% | 3.64% | 12.67% | 22.32% |
| Russell 2000 | –2.63% | –2.19% | 0.09% | 27.34% |
Source: Bloomberg
| Fixed Income Index | Month-to-Date | Year-to-Date | 12-Month |
| U.S. Broad Market | –0.12% | 0.75% | 1.00% |
| U.S. Treasury | –0.07% | 0.65% | –0.83% |
| U.S. Mortgages | –0.11% | 0.34% | 0.49% |
| Municipal Bond | 0.03% | 1.38% | 0.40% |
Source: Morningstar Direct
What to look forward to
A few widely followed economic data points will be reported this week. On Thursday, the final reading of Gross Domestic Product growth for the fourth quarter of 2016 will be released. It is expected to rise to 2 percent from the previous estimate of 1.9 percent.
Additionally, Jobless Claims data will be reported on Thursday.
The week will wrap up with the release of Personal Income and Outlays data.
Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index. The Bloomberg Barclays US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg Barclays US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg Barclays US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million.
Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com.
Authored by the Investment Research team at Commonwealth Financial Network.
© 2017 Commonwealth Financial Network®