Weekly Market Update, July 28, 2014

Presented by Mark Gallagher

General market news
• Equity markets were mixed last week, with no clear underlying themes. Instead, earnings-related news appears to be driving individual stock performance. This trend may continue over the next few weeks as earnings season runs its course.
• International equity markets performed better than their domestic peers, as Asian markets offset weakness in Europe and currency weakness relative to the U.S. dollar.
• Treasury yields saw some volatility last week, as the market digested corporate earnings news along with developments in the Middle East and Europe.
• Municipals continue to search for direction after a strong rally during the first half of 2014. With supply remaining limited during the summer months, demand has managed to keep rates low. Once again, this has left investors searching for yield further out on the curve, where valuations look more attractive on a relative basis.

Equity Index 

Week-to-Date %           Month-to-Date %           Year-to-Date %           12-Month %
S&P 500 

0.01%                                    1.03%                                     8.24%                          19.49%
Nasdaq Composite

0.40%                                    0.97%                                     7.23%                          25.02%

−0.82%                                  0.92%                                     3.62%                          11.61%

0.91%                                −0.06%                                     5.18%                          16.76%
MSCI Emerging Markets

1.67%                                    3.41%                                     9.76%                          15.52%
Russell 2000 

−0.59%                               −4.00%                                  −0.94%                         10.01%
Source: Bloomberg

Fixed Income Index

 Month-to-Date %               Year-to-Date %                12-Month %
U.S. Broad Market

0.13%                                     4.25%                                     4.58%
U.S. Treasury 

0.21%                                      3.43%                                    2.86%
U.S. Mortgages 

−0.25%                                     3.78%                                     4.66%
Municipal Bond 

0.32%                                      6.93%                                      8.57%
Source: Bloomberg

What to look forward to
This week features a number of significant economic reports with the potential to move markets. Second-quarter GDP will be released on Wednesday and the monthly employment report on Friday, sandwiching the Federal Reserve’s rate decision midweek.

Friday’s employment report should show another strong gain in Nonfarm Payrolls, and the Unemployment Rate is expected to remain unchanged at 6.1 percent.

In addition, GDP is expected to show a strong rebound in the second quarter, growing at an annualized rate of 3 percent after the first quarter’s sharp drop, which was due in part to bad weather.

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. The Barclays Capital U.S. Treasury Inflation Protected Securities (TIPS) Index measures the performance of intermediate (1- to 10-year) U.S. TIPS.


For IARs: Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave, North Saint Paul, MN. 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.

© 2014 Commonwealth Financial Network®