Weekly Market Update, September 26, 2016

Posted on September 26, 2016 by Neal Gallagher

Presented by Mark Gallagher

General market news
• The yield on the 10-year Treasury moved below 1.60 percent for the first time since breaking that level on September 8. At the time, less dovish commentary from the European Central Bank, coupled with surprisingly hawkish remarks from Boston Fed President Eric Rosengren, helped push yields higher. Rosengren then called for a September rate increase, even going so far as to dissent from last week’s no-hike decision by the Federal Open Market Committee.
• Led by the utilities and telecom sectors, the S&P 500 Index continued on a positive course, with a gain of 1.20 percent last week. The market reacted positively to the news that the Federal Reserve would keep rates steady. The “lower for longer” stance on interest rates should extend the favorable performance of higher-yielding stocks in the near future. The Nasdaq Composite Index moved roughly in line with the S&P 500, gaining 1.18 percent for the week.
• Economic data last week was somewhat negative, showing that both housing starts and existing home sales dropped in August. Despite an increase in building permits for single-family homes, multifamily permits fell. Existing home sales decreased by 2.3 percent, mainly due to lack of supply. The biggest news was the Federal Reserve’s decision not to raise rates, though many believe there is a strong case for a December rate hike.

Equity Index	Week-to-Date	Month-to-Date	Year-to-Date	12-Month
S&P 500	1.20%	–0.18%	7.62%	14.13%
Nasdaq Composite	1.18%	1.82%	6.95%	13.05%
DJIA	0.76%	–0.67%	6.94%	15.20%
MSCI EAFE	3.15%	1.06%	2.87%	7.31%
MSCI Emerging Markets	3.65%	2.00%	18.13%	19.08%
Russell 2000	2.45%	1.28%	11.65%	11.75%

Source: Bloomberg

Fixed Income Index	Month-to-Date	Year-to-Date	12-Month
U.S. Broad Market	–0.12%	5.73%	5.50%
U.S. Treasury	–0.22%	4.98%	4.55%
U.S. Mortgages	0.23%	3.67%	3.90%
Municipal Bond	–0.54%	3.98%	5.83%

Source: Morningstar Direct

What to look forward to
More housing data will be released this week, with New Home Sales expected to have decreased in August.

Durable Goods Orders are also expected to have been weak in August.

The final estimate for second-quarter Gross Domestic Product growth is projected at 1.3 percent.

The week will end with data on Personal Income and Outlays.

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.

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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.

Weekly Market Update, September 19, 2016

Posted on September 22, 2016 by Neal Gallagher

Presented by Mark Gallagher

General market news
• Both the 10-year and 30-year Treasuries continued to sell off last week, and they opened at yields of 1.69 percent and 2.43 percent, respectively, on Monday morning. All eyes will be on the Federal Open Market Committee (FOMC) meeting this week, as a potential rate hike could bring even more volatility.
• The S&P 500 bounced back from the prior week’s sell-off to gain 0.59 percent. Poor retail sales and industrial production data eased worries of a rate hike and helped fuel some of the gains. The technology sector led the way, though, as reports of a supply pinch for the new iPhone 7 Plus helped push up Apple stock. The Nasdaq Composite Index moved significantly higher on the news, posting a gain of 2.34 percent for the week.
• Economic data last week was mixed. The most notable release was the Consumer Price Index, which showed that headline prices rose 0.2 percent and core prices increased 0.3 percent. These increases lifted core inflation to 2.3 percent year-over-year after an increase in medical care and rental costs. In other news, August retail sales fell 0.3 percent at the headline level and 0.1 percent in the auto segment. Industrial production was also weak, showing a decline of 0.4 percent in the manufacturing component.

Equity Index	Week-to-Date	Month-to-Date	Year-to-Date	12-Month
S&P 500	0.59%	–1.37%	6.34%	9.61%
Nasdaq Composite	2.34%	0.64%	5.71%	8.62%
DJIA	0.25%	–1.41%	6.13%	11.20%
MSCI EAFE	–2.48%	–1.51%	–0.28%	–0.40%
MSCI Emerging Markets	–2.59%	–0.55%	13.97%	10.62%
Russell 2000	0.51%	–1.14%	8.97%	5.83%

Source: Bloomberg

Fixed Income Index	Month-to-Date	Year-to-Date	12-Month
U.S. Broad Market	–0.64%	5.18%	4.70%
U.S. Treasury	–0.73%	4.44%	3.91%
U.S. Mortgages	0.09%	3.53%	3.51%
Municipal Bond	–0.68%	3.82%	5.94%

Source: Morningstar Direct

What to look forward to
We will gain insight into August housing data with releases of Housing Starts and Existing Home Sales this week.

The focus, however, will be on the FOMC meeting announcement, with no rate change expected.

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Authored by the Investment Research team at Commonwealth Financial Network.

Weekly Market Update, September 12, 2016

Posted on September 12, 2016 by Neal Gallagher

Presented by Mark Gallagher

General market news
• Treasuries sold off late last week as a number of events seemed to support higher yields. New Treasury auctions were announced, the European Central Bank left its stimulus policy unchanged, and a handful of Federal Reserve officials—including historically dovish Boston Fed President Eric Rosengren—indicated that rates could move higher this year. The 10-year Treasury opened with a yield of 1.68 percent early this Monday morning, while the 30-year opened at 2.39 percent.
• The S&P 500 Index posted a loss of 2.36 percent last week, as hawkish comments from Fed officials pushed markets downward. The energy sector led gains after Russia and Saudi Arabia came to a deal to stabilize oil prices. Consumer staples and materials were the top detractors, with losses of 3.6 percent and 3.5 percent, respectively. The Nasdaq Composite Index also dropped by 2.35 percent.
• In a fairly quiet week for economic data, the ISM Non-Manufacturing Index fell more than expected, reaching its lowest levels in quite some time. The details of the August report were mostly negative, with new, export, and backlog orders all contracting. There was some positive news on the jobs front, with unemployment claims dropping slightly and the Department of Labor’s JOLTS report showing record levels of job openings.

Equity Index	Week-to-Date	Month-to-Date	Year-to-Date	12-Month
S&P 500	–2.36%	–1.95%	5.71%	12.01%
Nasdaq Composite	–2.35%	–1.66%	3.29%	9.12%
DJIA	–2.15%	–1.66%	5.87%	14.28%
MSCI EAFE	–0.13%	0.57%	2.26%	2.03%
MSCI Emerging Markets	1.12%	1.34%	17.00%	15.49%
Russell 2000	–2.59%	–1.64%	8.42%	7.82%

Source: Bloomberg

Fixed Income Index	Month-to-Date	Year-to-Date	12-Month
U.S. Broad Market	–0.53%	5.30%	5.18%
U.S. Treasury	–0.62%	4.56%	4.30%
U.S. Mortgages	–0.06%	3.37%	3.72%
Municipal Bond	–0.29%	4.23%	6.76%

Source: Morningstar Direct

What to look forward to
The focus this week will be on August inflation data, with releases of the Producer and Consumer Price indices. The CPI is expected to show only minor price pressure.

We will also see data on Retail Sales and Industrial Production.

Authored by the Investment Research team at Commonwealth Financial Network.

Weekly Market Update, September 6, 2016

Posted on September 6, 2016 by Neal Gallagher

Presented by Mark Gallagher

General market news
• The 10-year Treasury yield was quite volatile following the release of Friday’s weak employment report. After moving as low as 1.53 percent and as high as 1.63 percent, it opened early Monday morning around 1.60 percent. It seems likely that the jobs report will take a September rate hike off the table.
• The S&P 500 Index rose slightly last week, gaining 0.56 percent, after the jobs report miss eased near-term rate hike fears. The financial sector led gains while health care and energy were the top detractors, as drug pricing pressure and high oil inventories remain in the news. The Nasdaq Composite Index also moved a bit higher, posting a gain of 0.62 percent.
• Last week’s economic news was mixed. Personal consumption expenditures were up 0.1 percent month-over-month, but the rest of the week’s data was soft or negative. Jobless claims rose by 3,000 to 263,000, the ISM Manufacturing Index declined to 49.4, and unemployment remained at 4.9 percent. The Department of Labor’s employment report showed that nonfarm payrolls increased by 151,000 in August, versus expectations of 180,000. Wages also fell short of expectations; hourly earnings rose only 0.1 percent from the previous month and 2.4 percent from August of last year.

Equity Index	Week-to-Date	Month-to-Date	Year-to-Date	12-Month
S&P 500	0.56%	0.42%	8.27%	14.35%
Nasdaq Composite	0.62%	0.71%	5.84%	12.03%
DJIA	0.61%	0.50%	8.19%	16.16%
MSCI EAFE	–0.42%	0.55%	1.49%	3.81%
MSCI Emerging Markets	–1.00%	–0.17%	14.58%	15.13%
Russell 2000	1.15%	0.97%	11.29%	10.91%

Source: Bloomberg

Fixed Income Index	Month-to-Date	Year-to-Date	12-Month
U.S. Broad Market	–0.15%	5.70%	5.46%
U.S. Treasury	–0.17%	5.03%	4.60%
U.S. Mortgages	–0.05%	3.38%	3.70%
Municipal Bond	–0.18%	4.35%	6.68%

Source: Morningstar Direct

What to look forward to
This holiday-shortened week will be light in important economic news.

After last week’s disappointing manufacturing data, we expect the ISM Non-Manufacturing Index to show that the rest of the economy is holding up fairly well.