Presented by Mark Gallagher
General market news
• The 10-year Treasury yield opened at 1.59 percent early Monday and quickly dropped to 1.54 percent. (It had opened last Monday at 1.50 percent.) The range of 1.58‒1.60 percent seems to be the ceiling for the 10-year, and we think this could continue for some time, as investors around the globe continue to seek the relative safe haven of U.S. Treasuries.
• The S&P 500 was relatively flat for the second week in a row, gaining just 0.06 percent. The energy sector continued its rally from the prior week with an increase of 2.2 percent. This performance was backed by a 9-percent rebound in WTI crude oil prices, which moved to $48.52 per barrel. The increase came after comments from Russia’s energy minister about successful talks with Saudi Arabia to attain market stability. The Nasdaq Composite Index also moved slightly higher by 0.16 percent.
• The economic news last week was mixed. The week began with soft inflation data, as the Consumer Price Index remained relatively unchanged in July, showing a nominal 0.1-percent increase in core prices. Increases in medical care and housing costs tried to push the index higher, but energy prices and food costs pulled down the final value. On the other hand, Industrial Production increased 0.7 percent, led by improvements in mining segments.
| Equity Index | Week-to-Date | Month-to-Date | Year-to-Date | 12-Month |
| S&P 500 | 0.06% | 0.67% | 8.39% | 7.36% |
| Nasdaq Composite | 0.16% | 1.62% | 5.56% | 5.79% |
| DJIA | 0.02% | 1.00% | 8.45% | 9.87% |
| MSCI EAFE | ‒0.09% | 1.37% | 2.21% | ‒2.37% |
| MSCI Emerging Markets | 0.75% | 5.07% | 17.63% | 12.11% |
| Russell 2000 | 0.59% | 1.47% | 9.90% | 4.39% |
Source: Bloomberg
| Fixed Income Index | Month-to-Date | Year-to-Date | 12-Month |
| U.S. Broad Market | ‒0.29% | 5.68% | 5.37% |
| U.S. Treasury | ‒0.67% | 5.08% | 4.56% |
| U.S. Mortgages | ‒0.04% | 3.27% | 3.68% |
| Municipal Bond | 0.03% | 4.42% | 6.89% |
Source: Morningstar Direct
What to look forward to
We will focus on housing at the beginning of this week, with releases of New and Existing Home Sales, which are both expected to have slowed down in July.
We will also see the release of July Durable Goods Orders data and the second estimate of second-quarter Gross Domestic Product (GDP) growth.
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 Barclays Capital 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 Barclays Capital 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 Barclays Capital Municipal Bond 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 Adv
Authored by the Investment Research team at Commonwealth Financial Network.
© 2016 Commonwealth Financial Network®