Weekly Market Update, January 9, 2017

Presented by Mark Gallagher
General market news
• Treasury rates continued to decrease, with the 10-year yield opening this week at 2.39 percent and the 30-year at 2.96 percent.
• Helped by strong wage growth in the December jobs report, markets pushed higher last week, with all three major U.S. equity indices posting gains greater than 1 percent. During market action on Friday, the Dow Jones Industrial Average came within 0.37 points of hitting 20,000 for the first time.
• Every sector was up on the week with the exception of telecom, which lost just 0.1 percent. The three best-performing sectors were health care, technology, and consumer discretionary. Health care and technology had lagged the market since the election, due in part to questions surrounding the potential impact of the president-elect’s policies on drug prices and multinational technology companies. Last week’s reversal in these industries represents a move toward more traditional growth.
• The holiday-shortened week offered multiple positive economic reports. The ISM Manufacturing Index increased significantly in December, moving to its highest level in two years. The strongest component of the report was new orders, but employment, production, and export orders also did well. The ISM Non-Manufacturing Index remained steady, suggesting that the rest of the economy performed soundly to end the year. Lastly, the December employment report showed an increase of 156,000 jobs for the month, along with a 0.4-percent gain in average hourly earnings, pushing the annual rate up to 2.9 percent.


Equity Index Week-to-Date Month-to-Date Year-to-Date 12-Month
S&P 500 1.76% 1.76% 1.76% 16.94%
Nasdaq Composite 2.58% 2.58% 2.58% 15.61%
DJIA 1.07% 1.07% 1.07% 21.29%
MSCI EAFE 1.78% 1.78% 1.78% 7.47%
MSCI Emerging Markets 2.20% 2.20% 2.20% 19.20%
Russell 2000 0.76% 0.76% 0.76% 26.86%

Source: Bloomberg


Fixed Income Index Month-to-Date Year-to-Date 12-Month
U.S. Broad Market 0.17% 0.17% 2.17%
U.S. Treasury 0.18% 0.18% 0.42%
U.S. Mortgages 0.00% 0.00% 1.16%
Municipal Bond 0.51% 0.51% -0.10%

Source: Morningstar Direct

What to look forward to
In a fairly quiet week for economic news releases, we will see Import and Export Price data for December.

Toward the end of the week, the Producer Price Index will offer insight into producer inflation in December.

Finally, Retail Sales data for December will be released.

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®