Presented by Mark Gallagher
General market news
• The 10-year Treasury yield opened this Monday morning at 2.33 percent, down from last week’s high of 2.46 percent on Tuesday, which decreased steadily as the week went on. The 30-year yield also opened lower this week, at 2.96 percent.
• Equity markets continued their push higher, with the S&P 500 and Dow Jones Industrial Average posting gains of 0.73 percent and 0.99 percent, respectively. The Nasdaq Composite Index lagged, moving up by just 0.13 percent as weakness in the technology and biotech segments suppressed gains. Positive earnings reports from Home Depot and Walmart helped boost the consumer discretionary sector at a time when brick-and-mortar stores have mostly struggled. Bond proxy sectors such as utilities, telecom, and real estate led the way last week, as a risk-off trade drove a dip in the Russell 2000.
• Last week was quiet in terms of economic data, though January housing data came into focus. Existing home sales began 2017 on a good note, increasing 3.3 percent in January, with single-family home and condo sales particularly strong. Supply continues to be thin, but prices were slightly lower for the first month of the year. Although new home sales didn’t look as strong, that report tends to be quite volatile.
• Released on Wednesday, the minutes from the Federal Reserve’s recent meeting indicated that multiple policymakers have suggested hiking rates “fairly soon.” How soon that will be remains to be seen, with the probability of a March rate increase currently at just over 40 percent.
| Equity Index | Week-to-Date | Month-to-Date | Year-to-Date | 12-Month |
| S&P 500 | 0.73% | 4.12% | 6.09% | 25.36% |
| Nasdaq Composite | 0.13% | 4.25% | 8.78% | 30.26% |
| DJIA | 0.99% | 5.16% | 5.81% | 29.66% |
| MSCI EAFE | –0.13% | 1.30% | 4.23% | 18.19% |
| MSCI Emerging Markets | 0.51% | 3.83% | 9.54% | 31.62% |
| Russell 2000 | –0.36% | 2.48% | 2.89% | 38.49% |
Source: Bloomberg
| Fixed Income Index | Month-to-Date | Year-to-Date | 12-Month |
| U.S. Broad Market | 0.86% | 1.06% | 1.75% |
| U.S. Treasury | 0.73% | 0.96% | –0.90% |
| U.S. Mortgages | 0.70% | 0.66% | 0.76% |
| Municipal Bond | 0.62% | 1.28% | 0.23% |
Source: Morningstar Direct
What to look forward to
We anticipate several important economic data releases this week, including January Durable Goods Orders, the second estimate of Gross Domestic Product for the fourth quarter of 2016, and Personal Income and Outlays numbers.
The week will wrap up with February readings of the ISM Manufacturing and Non-Manufacturing indices, which are expected to have been fairly flat.
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®