Weekly Market Update, June 23, 2014

General market news
• Equity markets returned to their winning ways last week, with most major indices gaining well over 1 percent. The S&P 500 moved toward the 2,000 level with a 1.40-percent gain. Meanwhile, small-cap stocks continued to rebound from the sell-off earlier this year, gaining 2.24 percent last week. International markets lagged.
• This week should be relatively quiet in terms of economic reports. We will, however, get some more insight into the strength of the spring housing market, with both existing and new home sales data set for release early in the week.
• Treasury yields showed some volatility after last week’s Federal Open Market Committee meeting, rallying initially and then selling off later in the week. We expect the benchmark 10-year Treasury to remain range-bound in the short term, as it has for most of this year.

Equity Index 

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

1.40%                                2.16%                         7.24%                          25.85%
Nasdaq Composite

1.33%                               3.02%                          5.20%                          31.83%

1.03%                                1.47%                          3.41%                            17.26%

0.87%                               1.55%                           5.83%                          26.22%
MSCI Emerging Markets

−0.35%                           1.96%                            5.37%                          18.96%
Russell 2000 

2.24%                               4.85%                           2.73%                           24.95%
Source: Bloomberg

Fixed Income Index 

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

−0.52%                                3.52%                          3.72%
U.S. Treasury 

−0.78%                               2.58%                           1.55%
U.S. Mortgages

−0.09%                               3.68%                           4.30%
Municipal Bond 

−0.44%                              6.12%                             5.71%
Source: Bloomberg

What to look forward to
The economic data schedule for the upcoming week is light, but reports on housing could provide some useful insight. Both Existing and New Home Sales data will be released, along with the S&P/Case-Shiller Home Price Index. Economists are predicting growth, albeit at a slower pace than the previous readings for these indicators.

Later in the week, surveys for Durable and Capital Goods Orders are expected to show an increase in May. We will also see data on Core Personal Consumption Expenditures (PCE) growth. After a 1.4-percent increase during the previous period, economists expect an increase of 1.6 percent year-over-year. PCE data is followed closely by the Fed as an inflation measure.

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®