Weekly Market Update, October 13, 2014

Presented by Mark Gallagher

General market news
• Equity markets suffered significant declines last week, led by a 4.45-percent drop in the Nasdaq and a 4.63-percent drop in the Russell 2000 Index. Poor earnings data, technical factors, and geopolitical concern all played a role in equity market weakness.
• The International Monetary Fund cut its forecast for global growth last week, which, combined with negative news out of Europe, led to the risk-off trade. Treasuries rallied as investors sought safety assets, despite the impending end of the Federal Reserve’s quantitative easing program.

Equity Index Week-to-Date % Month-to-Date % Year-to-Date % 12-Month %
S&P 500 −3.09% −3.29% 4.78% 14.94%
Nasdaq Composite −4.45% −4.82% 3.34% 15.14%
DJIA −2.70% −2.87% 1.60% 11.93%
MSCI EAFE −0.33% −3.23% −4.01% 1.95%
MSCI Emerging Markets 1.15% 0.34% 2.91% 2.20%
Russell 2000 −4.63% −4.36% −8.57% −0.22%

Source: Bloomberg


Fixed Income Index Month-to-Date % Year-to-Date % 12-Month %
U.S. Broad Market 1.02% 5.41% 5.29%
U.S. Treasury 1.17% 4.86% 4.16%
U.S. Mortgages 0.70% 4.94% 4.53%
Municipal Bond 0.83% 9.24% 9.96%

Source: Bloomberg


What to look forward to
Early in the week, we will see data related to producer inflation, with the release of the Producer Price Index. Later in the week, Retail Sales numbers are expected to decrease after a strong showing last month.

Industrial Production data will be released Thursday and should show an increase from previous readings. The week will end with Housing Starts, which are expected to rise after dropping last month.

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®