Weekly Market Update, May 31, 2016

Presented by Mark Gallagher

General market news
• The short end of the Treasury yield curve has sold off more than any other part of the curve due to better-than-expected economic data. The 2-year yield stood at 0.92 percent early this Tuesday morning, up from a recent low of 0.70 percent three weeks ago. The 2-year started 2016 above 1 percent. The 10-year yield has moved between 1.82 percent and 1.88 percent for the last two weeks, opening at the high end of that range on Tuesday.
• U.S. equity investors certainly didn’t follow the “sell in May and go away” adage last week, as the major indices all gained well over 2 percent. The Nasdaq Composite Index once again posted the best performance, with a gain of 3.48 percent.
• There weren’t many economic reports last week, but those that were released reflected slightly better-than-expected results. In particular, new home sales growth and home price growth were positive, as many major real estate markets are seeing a very strong spring.


Equity Index Week-to-Date Month-to-Date Year-to-Date 12-Month
S&P 500 2.32% 1.89% 3.66% 1.99%
Nasdaq Composite 3.48% 3.53% –0.85% –0.63%
DJIA 2.15% 0.95% 3.81% 1.74%
MSCI EAFE 2.24% –0.75% –0.70% –9.43%
MSCI Emerging Markets 2.97% –3.64% 2.42% –19.05%
Russell 2000 3.47% 1.87% 1.88% –5.72%

Source: Bloomberg


Fixed Income Index Month-to-Date Year-to-Date 12-Month
U.S. Broad Market –0.03% 3.40% 2.94%
U.S. Treasury –0.05% 3.04% 2.96%
U.S. Mortgages 0.09% 2.23% 2.67%
Municipal Bond 0.21% 2.63% 5.80%

  Source: Morningstar Direct


What to look forward to
Several important economic data releases are expected this week, beginning with Personal Income and Outlays, with spending projected to have improved to start the second quarter.

The week will continue with the ISM Manufacturing and ISM Non-Manufacturing reports.

Finally, we’ll wrap up the week with the most anticipated economic news release, the May Employment report.

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.

© 2016 Commonwealth Financial Network®