Weekly Market Update, January 3, 2017

Presented by Mark Gallagher

General market news
• Treasury rates opened lower in 2017, with the 10-year yield at 2.43 percent after climbing as high as 2.64 percent in mid-December. The 30-year yield opened at 3.05 percent after hitting 3.21 percent in mid-December, and the 2-year yield opened at 1.18 percent. The 2-year has experienced the widest swing of late, standing at 0.55 percent on July 5, at 0.78 percent on November 4, and at 1.28 percent two weeks ago.
• All three major U.S. equity indices dropped last week, with the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average losing 1.08 percent, 1.43 percent, and 0.86 percent, respectively. The Dow’s slight move downward on light holiday volume was its first weekly loss since early November. News of low jobless claims and the highest consumer confidence in 15 years wasn’t enough to push the average above the 20,000 mark. Real estate was the only sector up on the week, posting a gain of 1.3 percent; the three worst-performing sectors were financials, technology, and consumer discretionary.
• The few economic reports released last week offered mixed news. The Conference Board’s measure of consumer confidence increased significantly, boosted by the expectations component. Jobless claims also remained relatively low at 268,000. The international trade report and pending home sales data were less positive. Higher mortgage rates and low supply did not help the home sales number.



Equity Index Week-to-Date Month-to-Date Year-to-Date 12-Month
S&P 500 –1.08% 1.97% 11.96% 10.91%
Nasdaq Composite –1.43% 1.20% 8.87% 7.61%
DJIA –0.86% 3.44% 16.50% 15.31%
MSCI EAFE 0.62% 3.44% 1.51% 0.86%
MSCI Emerging Markets 2.72% 0.05% 11.60% 11.98%
Russell 2000 –0.97% 2.80% 21.31% 19.86%

Source: Bloomberg


Fixed Income Index Month-to-Date Year-to-Date 12-Month
U.S. Broad Market –0.12% 2.65% 2.89%
U.S. Treasury –0.44% 1.04% 1.24%
U.S. Mortgages –0.16% 1.67% 1.92%
Municipal Bond 0.78% 0.25% 0.27%

Source: Morningstar Direct

What to look forward to
The first week of the New Year will begin with ISM Manufacturing Index data for December.

The minutes from the December meeting of the Federal Open Market Committee will be released Wednesday.

The week’s focus will be the December Employment report, to be released Friday.

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®