Weekly Market Update, November 28, 2016

Posted on November 28, 2016 by Neal Gallagher

Presented by Mark Gallagher

General market news
• Rates across the curve tested new highs last week. The yield on the 10-year Treasury was as high as 2.41 percent last Wednesday before falling to 2.32 percent early Monday; the 30-year yield touched 3.08 percent last Wednesday but opened lower at 2.97 percent this morning. The short end of the curve experienced some moves as well, with the 2-year yield as low as 1.04 percent last Tuesday, jumping to 1.16 percent on Friday, and opening Monday at 1.10 percent.
• There was no change in sentiment during the holiday week, as the risk-on rally extended its run. The S&P 500 was up 1.45 percent, hitting a new all-time high. The energy sector alone rose 2.2 percent in anticipation of a decision by OPEC to cut production. Telecom, materials, and consumer discretionary also performed well, the latter buoyed by better-than-expected holiday shopping forecasts. The worst-performing sectors were health care, technology, and real estate. The Nasdaq Composite Index also posted an all-time high after rising 1.46 percent on the week.
• The economic news last week was mostly positive. Existing home sales beat expectations, rising more than 2 percent for October due to strength in the single-family homes market. Durable goods orders climbed 4.8 percent, as the commercial aircraft segment had a strong October. On the other side of things, new home sales showed signs of weakness, with three of the four regions seeing declines. Lastly, the Fed meeting minutes continued to indicate a strong case for a rate hike.

Equity Index	Week-to-Date	Month-to-Date	Year-to-Date	12-Month
S&P 500	1.45%	4.33%	10.45%	8.30%
Nasdaq Composite	1.46%	4.22%	9.08%	6.85%
DJIA	1.51%	5.91%	12.66%	10.44%
MSCI EAFE	1.29%	–1.66%	–1.58%	–2.83%
MSCI Emerging Markets	1.34%	–5.39%	10.35%	5.14%
Russell 2000	2.41%	13.19%	20.17%	14.17%

Source: Bloomberg

Fixed Income Index	Month-to-Date	Year-to-Date	12-Month
U.S. Broad Market	–2.53%	2.33%	2.06%
U.S. Treasury	–2.72%	1.09%	0.95%
U.S. Mortgages	–2.00%	1.38%	1.45%
Municipal Bond	–2.96%	–0.12%	0.65%

Source: Morningstar Direct

What to look forward to
Several important economic data points are expected this week, including the second estimate of third-quarter GDP.

October consumer and manufacturing data is expected to have been relatively positive in the releases of Personal Income and Outlays and the ISM Manufacturing index.

The main focus, however, will be the November Employment report.

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, November 21, 2016

Posted on November 22, 2016 by Neal Gallagher

Presented by Mark Gallagher

General market news
• The 10-year Treasury yield tested the 2.35-pecent level this Monday morning. From a technical standpoint, the next key levels are 2.50 percent, 2.65 percent, and eventually 3 percent. Although yields have certainly moved off the bottom since July, keep in mind that the 30-year bond, which opened at 3.02 percent this morning, closed the week of Thanksgiving at 3.01 percent in 2014 and at 3.02 percent in 2015.
• The S&P 500 Index continued its upward move last week with a return of 0.89 percent. Positive economic data and continued favorable reaction to the proposed policies of President-elect Donald Trump helped markets shift higher. In an appearance before Congress on Thursday, Janet Yellen offered no surprises, stating that she sees a rate increase occurring “relatively soon.” The market continues to have high expectations for a December hike. The telecom, financial, and energy sectors led performance last week; the worst-performing sectors were materials, consumer staples, and health care. The Nasdaq Composite Index gained 1.68 percent for the week.
• Last week’s economic news was mostly good, with positive data for retail sales, housing starts, and consumer prices. Led by motor vehicle sales, headline retail sales increased 0.8 percent, beating expectations, and the previous month’s sales were also revised up, from 0.4 percent to 1 percent. Housing starts saw improvement in both single- and multi-family homes, and consumer prices were up 0.4 percent in October. Core prices increased by 0.1 percent, boosted by higher gasoline prices, putting the annual core inflation rate at 2.1 percent. Meanwhile, industrial production remained largely stagnant.

Equity Index	Week-to-Date	Month-to-Date	Year-to-Date	12-Month
S&P 500	0.89%	2.83%	8.87%	7.06%
Nasdaq Composite	1.68%	2.72%	7.50%	6.17%
DJIA	0.26%	4.34%	10.98%	9.30%
MSCI EAFE	–1.52%	–2.91%	–2.83%	–3.53%
MSCI Emerging Markets	–0.52%	–6.65%	8.89%	5.45%
Russell 2000	2.62%	10.53%	17.34%	14.01%

Source: Bloomberg

Fixed Income Index	Month-to-Date	Year-to-Date	12-Month
U.S. Broad Market	–2.33%	2.54%	2.45%
U.S. Treasury	–2.57%	1.25%	1.33%
U.S. Mortgages	–1.65%	1.75%	1.88%
Municipal Bond	–2.53%	0.32%	1.53%

Source: Morningstar Direct

What to look forward to
More October housing data will be released this week, including Existing and New Home Sales, which are expected to be lower, perhaps as a result of low inventory.

Durable Goods Orders are expected to have improved in October.

We will also see data on International Trade and the release of the November Federal Reserve meeting minutes.

Authored by the Investment Research team at Commonwealth Financial Network.

Weekly Market Update, November 14, 2016

Posted on November 14, 2016 by Neal Gallagher

Presented by Mark Gallagher

General market news
• The 10-year Treasury yield climbed back up to where it began 2016, opening at 2.30 percent early this Monday morning. The 30-year yield moved above 3 percent for the first time since January, and the 2-year was approaching 1 percent for the first time in almost 11 months. The election of Donald Trump appears to have prompted some selling by international governments.
• The S&P 500 Index experienced a strong rally this week, posting a return of 3.87 percent. With the uncertainty of the presidential election now behind us, markets saw large gains as part of a risk-on rally. The financial, industrial, and health care sectors gained the most, as those areas are expected to benefit from the president-elect’s proposed policy measures. The worst-performing sectors were real estate, consumer staples, and utilities, as investors favored risk and moved away from higher-yielding and defensive stocks. The Nasdaq Composite Index gained 3.79 percent for the week.
• Last week’s economic data releases were dwarfed by the election news, but we did see an uptick in the preliminary November reading of the University of Michigan Consumer Sentiment Index. The forward-looking expectations component was particularly strong, suggesting consumers’ economic outlook is relatively upbeat.

Equity Index	Week-to-Date	Month-to-Date	Year-to-Date	12-Month
S&P 500	3.87%	1.92%	7.90%	6.62%
Nasdaq Composite	3.79%	1.01%	5.72%	4.66%
DJIA	5.52%	4.07%	10.70%	9.33%
MSCI EAFE	0.11%	–1.45%	–1.34%	–2.67%
MSCI Emerging Markets	–3.51%	–6.16%	9.46%	4.66%
Russell 2000	10.27%	7.70%	14.34%	10.55%

Source: Bloomberg

Fixed Income Index	Month-to-Date	Year-to-Date	12-Month
U.S. Broad Market	–1.32%	3.60%	3.76%
U.S. Treasury	–1.57%	2.29%	2.61%
U.S. Mortgages	–0.76%	2.67%	3.04%
Municipal Bond	–0.81%	2.09%	3.73%

Source: Morningstar Direct

What to look forward to
We will see more housing data this week, with releases of both Existing and New Home Sales.

Durable Goods Orders are expected to have ticked up in January, while the preliminary estimate of Fourth-Quarter Gross Domestic Product is expected to drop to 0.5 percent.

The week will end with data on Personal Income and Outlays, with both income and spending expected to improve, as well as Consumer Confidence.

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Weekly Market Update, November 7, 2016

Posted on November 7, 2016 by Neal Gallagher

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.

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Authored by the Investment Research team at Commonwealth Financial Network.