Weekly Market Update, June 6, 2016

Presented by Mark Gallagher

General market news
• The 10-year Treasury yield opened Monday morning at its lowest level in nearly a month, 1.70 percent, after a weaker-than-expected jobs report on Friday. Similarly, the yield on the 30-year Treasury opened at its lowest level since February 10, when it touched 2.48 percent. The 2-year Treasury was also lower, at 0.77 percent, after being as high as 0.93 percent early last week. This performance can likely be attributed to the assumption that a Federal Reserve rate hike in June has been taken off the table.
• Domestic large-cap equities were little changed last week, although there was some volatility as the S&P 500 Index struggled with the 2,100 level. The small-cap space bucked the trend and posted a 1.20-percent gain, making this the best-performing asset class for the week; it remains firmly in the red for the prior 12-month period, however. International markets were broadly lower.
• The big economic news last week was a weaker-than-expected jobs report, which showed that the U.S. economy added just 38,000 jobs in May. The strike at Verizon likely distorted these numbers somewhat—a situation that will likely correct itself in the coming months. Conversely, the unemployment rate dropped to 4.7 percent, but that was largely due to a shrinking labor pool.


Equity Index Week-to-Date Month-to-Date Year-to-Date 12-Month
S&P 500 0.04% 0.13% 3.71% 1.49%
Nasdaq Composite 0.19% –0.11% –0.67% –1.77%
DJIA –0.30% 0.15% 3.49% 1.15%
MSCI EAFE –0.88% –0.84% –1.58% –10.78%
MSCI Emerging Markets 0.23% 0.30% 2.65% –16.43%
Russell 2000 1.20% 0.82% 3.11% –6.57%

Source: Bloomberg


Fixed Income Index Month-to-Date Year-to-Date 12-Month
U.S. Broad Market 0.61% 4.09% 5.05%
U.S. Treasury 0.76% 3.88% 5.24%
U.S. Mortgages 0.26% 2.54% 4.10%
Municipal Bond 0.19% 2.89% 6.71%

Source: Morningstar Direct

What to look forward to
We expect a light week on the economic news front, with releases of the JOLTS report and data on Consumer Sentiment.

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.
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.

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