Weekly Market Update, November 3, 2014

Presented by Mark Gallagher

General market news
• Treasury yields were up initially following the release of last week’s Federal Reserve meeting minutes, which seemed to be more hawkish than anticipated. Reading between the lines, however, the Fed is still concerned with the pace at which the economy is expanding. The 10-year Treasury opened Monday morning at 2.32 percent, in line with where it began last week.
• The Fed ended its quantitative easing (QE) program with no major market movement, an encouraging sign for the time being. The end of QE is still fresh, though, and we will be keeping a close eye on the markets, both equity and fixed income, to see if there is any impact in the weeks to come.
• Equities posted a strong week of performance. Large-cap stocks fared well, with the S&P 500 Index and the Dow Jones Industrial Average returning 2.74 percent and 3.48 percent, respectively. Small-caps were the best-performing asset class, with the Russell 2000 Index returning 4.90 percent on the week.
• Several pieces of good news contributed to last week’s strong equity performance. An unexpected announcement from the Bank of Japan that it would increase its stimulus efforts helped boost equity markets across the globe. In addition, some positive economic data points from the eurozone tempered fears that the area will slip back into recession, and strong corporate earnings supported U.S. equities.

Equity Index Week-to-Date % Month-to-Date % Year-to-Date % 12-Month %
S&P 500 2.74% 2.44% 10.99% 17.26%
Nasdaq Composite 3.30% 3.10% 11.95% 19.65%
DJIA 3.48% 2.16% 6.86% 14.48%
MSCI EAFE 1.13% −2.50% −3.28% −1.02%
MSCI Emerging Markets 2.38% 0.34% 2.91% 0.11%
Russell 2000 4.90% 6.59% 1.90% 8.07%

Source: Bloomberg


Fixed Income Index Month-to-Date % Year-to-Date % 12-Month %
U.S. Broad Market 0.99% 5.39% 4.27%
U.S. Treasury 1.09% 4.78% 3.25%
U.S. Mortgages 0.96% 5.21% 3.98%
Municipal Bond 0.61% 8.99% 8.37%

Source: Bloomberg

What to look forward to
This week will feature data on manufacturing activity, with ISM Manufacturing expected to remain fairly solid, as well as Factory Orders. ISM Non-Manufacturing data is expected on Wednesday.

The week will end with the Employment report, which is expected to remain mostly unchanged, with a slight increase in average hourly earnings.

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.


Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Avenue, 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.

© 2014 Commonwealth Financial Network®