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Another Week of Highs

October 02, 2017 at 2:28 PM

 

Before we begin our usual weekly commentary, we wanted to take a moment to honor the victims of Sunday’s terrible attack in Las Vegas. Though details are still scarce, it is the most devastating mass shooting in U.S. history. Our thoughts are with the victims, their families, and with the community that now must cope with the aftermath of the tragedy. As we look for answers, let’s also remember to be grateful for the ones we love.

Last week’s final performance of Q3 saw the S&P 500 hit a new high and finish up 0.68%.[i] Meanwhile, the Nasdaq beat previous records with a 1.07% gain, and the Dow notched a 0.25% increase to come within 0.1% of its all-time high.[ii] International markets, however, experienced a slight drop¾the MSCI EAFE fell 0.19% for the week.[iii]

As the country continues its recovery from Hurricanes Harvey, Irma, and Maria, the economy keeps revealing positive strides. A few specific performance factors rounded out the week. 

  • Small Cap Gains Post Strong Returns

Small cap gains hit record highs last week.[iv] Some analysts think the gain is partially a result of President Trump’s proposed tax code changes¾which offers tax cuts to corporations and individuals.[v] Because small cap companies often have limited international resources, they often benefit the most from tax cuts.[vi] That said, rising interest rates and a higher dollar are also factors to take into account.[vii]

  •  Dollar Is On the Rise

The dollar index fell on Friday, but the buck still points towards weekly and monthly highs.[viii] Despite dipping after news of slow consumer spending, the greenback responded positively to increases in consumer sentiment and the Chicago Purchasing Managers Index.[ix] The Chicago Purchasing Managers Index matters to investors because it measures manufacturing and non-manufacturing activity in the greater Chicagoland area. These numbers tend to closely mirror the rest of the country.[x]

 

  • Corporate Earnings Hit New Highs

Corporate earnings are a signifier of how well corporate stocks perform. Last week, earnings posted back-to-back double-digit gains for the first time since 2011.[xi] This performance helped push markets beyond geopolitical affairs and concerns from the recent devastation caused by hurricanes.[xii]

 

What Is Ahead?

Markets will continue to watch out for Harvey, Irma, and Maria’s influence on this week’s key economic reports. Analysts expect strong data from manufacturing to vehicle sales, though damages to ports may affect international trade.[xiii]

Further, we are watching the Fed’s decisions to shrink its balance sheet and raise interest rates.[xiv] We will also continue following how President Trump’s recent announcement to possibly replace Fed Chair Janet Yellen (whose tenure ends in February) affects the markets.[xv]

 

As always, we continue our focus on helping you meet your long-term goals. If you have any questions as to how last week’s news may affect your portfolio, let us know. We are here to answer questions and help your investment process run smoothly.

 

ECONOMIC CALENDAR

Monday: PMI Manufacturing Index, ISM Manufacturing Index, Construction Spending

Tuesday: Motor Vehicle Sales
Wednesday: ADP Employment Report, ISM Non-Mfg Index

Thursday: Factory orders

Friday:  Employment Situation

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Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

Diversification does not guarantee profit nor is it guaranteed to protect assets.

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.

The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.

The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indices from Europe, Australia and Southeast Asia.

The S&P/Case-Shiller Home Price Indices are the leading measures of U.S. residential real estate prices, tracking changes in the value of residential real estate. The index is made up of measures of real estate prices in 20 cities and weighted to produce the index.

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Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Past performance does not guarantee future results.

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Broker dealer or Investment Advisor, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

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