Presented by Mark Gallagher
General market news
• Starting last week below 2.30 percent, the 10-year Treasury yield climbed as high as 2.52 percent on Friday before dropping below 2.50 percent once again this Monday morning. The Federal Reserve is getting closer to raising rates, which should help move Treasuries, but the 2.50-percent level has proven difficult for the 10-year to break.
• All three major U.S. indices were up last week, with the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average gaining 0.71 percent, 0.46 percent, and 0.94 percent, respectively. On Tuesday, President Trump gave his first speech to Congress, which was widely praised for its positive tone. Markets reacted favorably the following day, posting the largest daily gain of the year.
• Hawkish comments by Federal Reserve policymakers Janet Yellen, Stanley Fischer, and William Dudley indicated a rate hike in the near future. Yellen stated that a rate increase would likely be appropriate if economic data holds up. As a result, the financial sector led the way last week, followed by energy and health care. The laggards included telecom, real estate, and consumer staples.
• Last week’s economic data was mixed. Durable goods orders came in above expectations, primarily on increases in aircraft orders. The second estimate of gross domestic product for the fourth quarter of 2016 disappointed slightly by remaining unchanged. Personal income and outlays also fell short, primarily due to above-normal temperatures that led to declines in utilities spending. Finally, the ISM Manufacturing Index surprised by increasing to levels not seen since 2014.
|MSCI Emerging Markets||–1.28%||–0.54%||8.13%||22.60%|
|Fixed Income Index||Month-to-Date||Year-to-Date||12-Month|
|U.S. Broad Market||–0.66%||0.20%||1.10%|
Source: Morningstar Direct
What to look forward to
This week will be relatively quiet in terms of major economic updates. The most important releases include the International Trade report, Jobless Claims, and the Employment Situation report for February. The market will be paying close attention to the employment report, which comes a week before the next Federal Open Market Committee meeting.
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 email@example.com.
Authored by the Investment Research team at Commonwealth Financial Network.
© 2017 Commonwealth Financial Network®