Weekly Market Update, July 7, 2014

General market news
• Over the last few trading days, government debt has posted both higher and lower yields than we’ve seen in the last 30 days. The yield on the 10-year Treasury dipped as low as 2.51 percent early last week before ending the shortened week at 2.68 percent on Thursday. Early Monday morning, the 10-year yield stood at 2.64 percent.
• Equity markets started the Independence Day holiday early, with broad-based gains of more than 1 percent in the shortened week. In the middle of the pack, the S&P 500 gained 1.28 percent. Higher-beta indices, such as the Nasdaq, Russell 2000, and MSCI Emerging Markets, were the best performers for the week.
• Although there wasn’t a lot of economic news last week, the reports that were released had a noticeable impact on the market. Strong housing data early in the week, along with promising employment data at the end, seemed to signal some acceleration in those areas of the economy.

Equity Index 

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

1.28%                                  1.31%                                  8.53%                             25.47%
Nasdaq Composite 

2.03%                                 1.78%                                 8.09%                            31.97%

1.31%                                   1.46%                                4.17%                              16.58%

1.52%                                  0.96%                                6.25%                             25.10%
MSCI Emerging Markets  

1.73%                                  1.16%                                 7.37%                             19.45%
Russell 2000 

1.58%                                   1.27%                                4.50%                             23.47%
Source: Bloomberg

Fixed Income Index 

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

−0.65%                                                  3.44%                                                 3.79%
U.S. Treasury 

−0.70%                                                 2.49%                                                 1.62%
U.S. Mortgages 

−0.57%                                                  3.45%                                                  4.28%
Municipal Bond 

−0.47%                                                 6.09%                                                  5.98%
Source: Bloomberg

What to look forward to
The upcoming week will be very light in terms of economic releases. Investors are anticipating the Federal Open Market Committee meeting minutes on Wednesday, which could provide further insight into the direction of monetary policy.

Another indicator to keep an eye on is Consumer Credit, which tracks the amount of outstanding credit used by consumers. This number has been trending higher and can be quite volatile. An increase in consumer credit would be in line with broader confidence in the lending market.

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.

Authored by the Investment Research team at Commonwealth Financial Network.

© 2014 Commonwealth Financial Network®