Presented by Mark Gallagher
General market news
• The 10-year Treasury yield opened at 2.41 percent this Monday morning, its lowest level in more than two weeks. It has tested 2.50 percent a few times in that same span, twice last week alone. The 30-year yield opened at 3.04 percent, closer to the bottom of its recent range and down from 3.12 percent late last week.
• Markets were mostly flat last week, with the S&P 500 and Nasdaq Composite indices posting gains of 0.16 percent and 0.13 percent, respectively. The top-performing sectors were health care and consumer staples; the worst-performing sectors included industrials, materials, and telecom.
• U.S. stocks began the week with the worst daily performance of early 2017 as Donald Trump’s new restrictions on immigration and proposed border adjustments prompted concerns for technology companies and others. Late in the week, however, a push toward deregulation—with the administration calling for a review of the Dodd-Frank Act, the Volcker Rule, and the Department of Labor’s fiduciary rule—helped financials and markets rally.
• Last week’s economic data was mostly positive. Personal income rose 0.3 percent in December, and consumer spending was up a solid 0.5 percent. The ISM Manufacturing report for January showed a strong 1.5-point gain, suggesting continued recovery in U.S. manufacturing. The Federal Reserve kept its policy rate unchanged, describing economic activity as moderate. It is expected to raise rates three times this year but may wait for more clarity on the direction of fiscal stimulus before making its next move. The January employment report was mostly positive, with payrolls rising more than expected and the trade, retail, and transportation sectors showing strength. An increase in the labor force and participation rate drove unemployment up very slightly to 4.8 percent.
| Equity Index | Week-to-Date | Month-to-Date | Year-to-Date | 12-Month |
| S&P 500 | 0.16% | 0.81% | 2.76% | 22.77% |
| Nasdaq Composite | 0.13% | 0.94% | 5.33% | 27.39% |
| DJIA | –0.09% | 1.06% | 1.69% | 26.17% |
| MSCI EAFE | 0.04% | 0.57% | 3.49% | 14.72% |
| MSCI Emerging Markets | 0.33% | 1.06% | 6.60% | 30.85% |
| Russell 2000 | 0.54% | 1.19% | 1.59% | 38.46% |
Source: Bloomberg
| Fixed Income Index | Month-to-Date | Year-to-Date | 12-Month |
| U.S. Broad Market | –0.17% | 0.02% | 1.04% |
| U.S. Treasury | –0.21% | 0.02% | –1.53% |
| U.S. Mortgages | –0.14% | –0.17% | 0.17% |
| Municipal Bond | 0.04% | 0.70% | –0.56% |
Source: Morningstar Direct
What to look forward to
This week will be quiet, featuring news about International Trade and Consumer Sentiment.
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®