Weekly Market Update, November 7, 2016

Presented by Mark Gallagher

General market news
• U.S. Treasuries have experienced volatility over the last few weeks due to several factors, including the upcoming election. The good news is that the election will soon be over, leaving yields to react to more traditional economic indicators and Federal Reserve projections. The 10-year yield went as high as 1.88 percent last week and as low as 1.71 percent, before opening this Monday morning at 1.82 percent.
• The S&P 500 Index continued its sell-off last week, posting a return of –1.89 percent. The uncertainty of the election appears to have led the market to take a risk-off position. Fortunately, as expected, the Federal Reserve opted to keep rates unchanged during its November meeting, avoiding additional uncertainty. All sectors were down last week, but materials, industrials, and utilities saw the smallest losses. The worst-performing sectors were technology, telecom, and energy. The Nasdaq Composite Index posted a loss of 2.70 percent for the week.
• The biggest economic news last week was the Fed’s decision to keep rates at their current level. The economic data was mostly positive. Both personal income and consumer spending showed signs of improvement, as income increased by 0.3 percent and consumer spending moved up by 0.5 percent. The ISM Manufacturing Index also showed a modest increase, but that news was offset by signs of slowing in the ISM Non-Manufacturing Index, as new orders moved lower. Lastly, the employment report showed solid payroll growth, with upward revisions to nonfarm payrolls data for August and September. The unemployment rate now sits at 4.9 percent.

Equity Index Week-to-Date Month-to-Date Year-to-Date 12-Month
S&P 500 –1.89% –1.89% 3.88% 1.39%
Nasdaq Composite –2.70% –2.70% 1.86% –0.59%
DJIA –1.47% –1.47% 4.91% 2.80%
MSCI EAFE –1.55% –1.55% –1.44% –3.70%
MSCI Emerging Markets –2.57% –2.57% 13.45% 4.16%
Russell 2000 –2.01% –2.01% 3.69% –0.76%

Source: Bloomberg


Fixed Income Index Month-to-Date Year-to-Date 12-Month
U.S. Broad Market 0.16% 5.15% 5.38%
U.S. Treasury 0.28% 4.21% 4.65%
U.S. Mortgages 0.09% 3.54% 3.87%
Municipal Bond 0.17% 3.10% 4.66%

Source: Morningstar Direct


What to look forward to
The election week should be a quiet one for economic news. We will see data on consumer credit and Consumer Confidence, which is expected to increase only slightly after its recent drop.

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®