Presented by Mark Gallagher

Software stocks were hit hard; Salesforce showed signs of a slowing economy and less software spending from its customers. AI infrastructure firms such as Nvidia continued to move higher.

Quick Hits

1. Report releases: Personal income and spending growth slowed in April.
2. Financial market data: Software stocks tumbled as companies tightened budgets.
3. Looking ahead: This week, the focus will be on the May employment report.

Report Releases—May 28–31, 2024

Conference Board Consumer Confidence Index: May (Tuesday)

Consumer confidence surprisingly improved in May, breaking a three-month streak of declines. The improvement was largely driven by a notable rise in consumer expectations.

-Expected/prior month consumer confidence: 96/97.5

-Actual consumer confidence: 102

Federal Reserve Beige Book (Wednesday)

The Beige Book showed slight or modest growth for most of the 12 districts reporting, with 2 noting no change in activity. Overall outlooks were slightly more pessimistic amid reports of rising uncertainty and greater downside risks of tight credit standards and high interest rates, constraining growth.

Second Estimate of GDP: First Quarter (Thursday)

The second estimate of first-quarter GDP was in line with expectations. As part of the report, we received the Personal Consumption Expenditures Price Index (Core PCE) for the first quarter. The reading, which excludes food and energy, was slightly below expectations at 3.6 percent annualized, versus expectations of 3.7 percent.

-Expected/first-quarter GDP estimate: 1.3%/1.6%

-Actual second first-quarter GDP estimate: 1.3%

Personal Spending and Personal Income: April (Friday)
Personal income and spending continued to rise in April, though both slowed compared with the
previous month.

-Expected/prior personal income monthly change: +0.3%/+0.5%

-Actual personal income change: +0.3%

-Expected/prior personal spending monthly change: +0.3%/+0.7%

-Actual personal spending change: +0.2%

The Takeaway

-Consumer confidence was higher than expected as consumer expectations improved.

-Personal income and spending growth slowed in April.

Financial Market Data

Equity

Source: Bloomberg, as of May 31, 2024

U.S equities were mostly lower. Energy, real estate, and utilities were among the top performing sectors. Underperformers included health care, communication services, industrials, and technology. Software stocks were a notable soft spot, with Salesforce, Intuit, ServiceNow, Paycom, and Workday each falling more than 12.9 percent. Salesforce cited a slowdown in the macroeconomic environment and corporate budgets as it just missed revenue estimates at $9.13 billion versus expectations of $9.17 billion, its first top line miss in 18 years.

Fixed Income

Source: Bloomberg, as of May 31, 2024

The yield curve saw a slight steepening as consumer confidence rose and the second estimate of first-quarter GDP was in line. The 2-year yield fell 6 basis points (bps), closing the week at 4.89 percent. The 30-year rose 8 bps to close at 4.65 percent and the 10-year increased 5 bps to close at 4.51 percent.

The Takeaway

-Software stocks receded as Salesforce missed sales estimates. Corporations appear to be tightening budgets on the software side.

-The yield curve steepened slightly as short-term yields fell and long-term yields rose.

Looking Ahead

The focus this week will be on the May employment report, which is due Friday. We also expect Institute for Supply Management (ISM) and international trade balance reports.

-The week kicks off on Monday with the release of the ISM Manufacturing index for May. Manufacturer confidence is expected to improve modestly after falling more than expected
in April.

-On Wednesday, we expect the release of the ISM Services index for May. Service sector confidence is expected to improve after falling into contractionary territory in April.

-The international trade balance report for April is expected on Thursday. It is set to increase, due in part to increased imports of goods.

-Finally, on Friday, the employment report for May will be released. Hiring is expected to accelerate after slowing more than expected in April. If estimates hold, the 180,000 jobs that are forecast would represent a healthy level of hiring.

Disclosures: This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

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 Bloomberg US 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 Bloomberg US 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 Bloomberg US Municipal 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. One basis point is equal to 1/100th of 1 percent, or 0.01 percent.

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.

© 2024 Commonwealth Financial Network

Presented by Mark Gallagher

Quick Hits

1. Markets Rebound in May

Stocks rallied after declining in April.

2. Falling Yields Support Bond Prices

Falling interest rates caused bond price to rise.

3. Labor Market Cools in April

The April jobs report showed encouraging signs of softening labor demand.

4. Additional Signs of Slowing Growth

Several key economic updates pointed toward slowing growth.

5. Market Risks to Monitor

Domestic, international, and unknown risks remain for markets.

6. Improving Fundamentals and Positive Outlook

Economic and market fundamentals support future improvements.

Markets Rebound in May  

Markets rallied in May, with all three major U.S. indices up for the month. The S&P 500 gained 4.96 percent, the Dow Jones Industrial Average grew 2.58 percent, and the Nasdaq Composite soared 6.98 percent. Equity markets were supported by solid earnings growth and lower interest rates.

Per Bloomberg Intelligence, as of May 30, with 98 percent of companies having reported earnings, the average earnings growth rate for the S&P 500 in the first quarter was 7.8 percent. This is notably higher than analyst estimates at the start of earnings season for a 3.8 percent increase. Growth was widespread, with 10 of 11 sectors beating analyst estimates. Earnings have increased in each of the past three quarters, which is an encouraging sign for investors because fundamentals drive
long-term performance.

Technical factors were also supportive. All three major U.S. indices spent the entire month above their respective 200-day moving averages. (The 200-day moving average is a widely monitored technical indicator because sustained breaks above or below this level can signal shifting investor sentiment for an index.) The combination of continued technical support and improving fundamentals in May was welcome after short-lived declines in April.

The story was similar for international equities. The MSCI EAFE Index gained 3.87 percent and the MSCI Emerging Markets Index rose 0.59 percent. Technical results were also supportive for international stocks; both the MSCI EAFE and MSCI Emerging Markets indices spent the entire month above their respective 200-day moving averages.

Falling Yields Support Bond Prices

Falling long-term interest rates helped support bond prices. The 10-year Treasury yield fell from 4.69 percent at the end of April to 4.51 percent at the end of May. Signs of slowing economic growth and a cooling job market contributed to the fall in interest rates. The Bloomberg Aggregate Bond Index gained 1.7 percent.

High-yield bond returns were also positive, supported by stable credit spreads that ended the month largely unchanged. The Bloomberg U.S. Corporate High Yield Index gained 1.1 percent.

Labor Market Cools in April

The May rally for markets was sparked by signs of slower economic growth, which helped calm investor concerns about a potentially overheated economy. The April job report was a highlight; it showed a notable slowdown in hiring, with 175,000 jobs added during the month. This was down from the 315,000 jobs added in March, and it was viewed by investors and economists as a healthy development after months of stronger-than-expected job growth to start the year.

Underlying employment data also pointed toward slower growth, with annual wage growth falling to a two-year low and the unemployment rate picking up modestly. Softening labor market conditions are one factor the Federal Reserve (Fed) has noted could lead to interest rate cuts later this year because of the central bank’s dual mandate to support stable prices and maximum employment.

The Takeaway

-Slowing job growth in April was a welcome development for investors concerned about inflation.

-Underlying data also showed encouraging signs of softening labor demand.

Additional Signs of Slowing Growth

Other economic releases also pointed toward slower but potentially healthier growth for the economy. Personal income and spending growth came in below expectations in April, which is another good sign for investors concerned with inflation. Speaking of inflation, the April Consumer Price Index report was also supportive; it showed that consumer prices rose less than expected in the month and consumer inflation slowed on a year-over-year basis.

Consumer and business confidence also declined in April. As you can see in Figure 1, service sector confidence fell for the third consecutive month, bringing confidence to its lowest level in more than one year. This is a diffusion index, where values above 50 indicate expansion and values below 50 indicate contraction. April marked only the second time service sector confidence has dropped into contractionary territory since the end of pandemic-era lockdowns. The service sector accounts for the majority of hiring in the U.S.; falling service sector confidence signals potentially lower demand ahead for service
sector workers.

Figure 1: ISM Services PMI Composite Index

Source: Institute for Supply Management/Haver Analytics, 05/03/2024

The Takeaway

-Slowing economic growth and falling inflationary pressure were welcome developments.

-Falling consumer and business confidence could be a sign of further slowdowns ahead.

Market Risks to Monitor  

Although the signs of slowing growth were largely welcomed by investors and economists, inflation remains one of the most pressing risks for markets. As we saw in April, interest rates and stocks remain sensitive to signs of rising inflationary pressure, and it’s possible we’ll see an uptick in inflation in the months ahead that could dissuade investors.

In addition, we face considerable political uncertainty because of the U.S. federal elections in November. We’re likely to see this uncertainty ramp up as we kick off the political convention season this summer and head toward Election Day in the fall.

International risks remain, too, as shown by continued conflicts in Ukraine and the Middle East. Although the direct market impact of these geopolitical events has been largely muted, they still serve as sources of global uncertainty that have the potential to negatively impact markets. In addition, the continued slowdown in China is worth monitoring because of the nation’s importance to the global economy.

And, of course, there are always unknown risks that could materialize and affect markets.

The Takeaway

-Real risks remain for markets, both domestically and abroad.

-Domestic risks include inflation and political uncertainty, whereas ongoing conflicts in Ukraine and the Middle East highlight the international risks.

Improving Fundamentals and a Positive Outlook

Despite the risks markets face, we are in a good place on the whole. The signs of slowing but still positive growth for the economy were a welcome development and signal a potentially healthier economic backdrop in the second half of the year. In addition, strong earnings growth in the first quarter was a positive sign for investors. Looking ahead, analysts expect to see continued strong earnings growth throughout the year, which should be a tailwind for markets. With a supportive economic backdrop and improving fundamentals, markets appear set for a strong second half of the year.

That’s not to say we can’t or won’t face setbacks along the way. April was a reminder that, though we’ve made progress in tamping inflation down, there remains real work to get back to the Fed’s 2 percent target. Although the most likely path forward is for continued economic growth and market appreciation, it’s quite possible we’ll see short-term speed bumps along the way. Given the potential for uncertainty, a well-diversified portfolio that matches investor goals and timelines remains the best strategy for most investors. If concerns remain, however, speak to your financial advisor to review your financial plans.

Disclosures: This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation. 

Certain sections of this commentary contain forward-looking statements 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. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets. All indices are unmanaged and investors cannot invest directly into an index. The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue-chip stocks. The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. 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 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. It excludes closed markets and those shares in otherwise free markets that are not purchasable by foreigners. The Bloomberg Aggregate Bond Index is an unmanaged market value-weighted index representing securities that are SEC-registered, taxable, and dollar-denominated. It covers the U.S. investment-grade fixed-rate bond market, with index components for a combination of the Bloomberg government and corporate securities, mortgage-backed pass-through securities, and asset-backed securities. The Bloomberg U.S. Corporate High Yield Index covers the USD-denominated, non-investment-grade, fixed-rate, taxable corporate bond market. Securities are classified as high-yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below.

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.

© 2024 Commonwealth Financial Network

Presented by Mark Gallagher

Technology and communication services were the only equity sectors that were positive last week. U.S. Treasuries sold off amid concerns of persistent inflation.

Quick Hits

1. Report releases: Existing home sales fell for the second consecutive month in April.
2. Financial market data: Semiconductors led a narrow rally after Nvidia earnings were released.
3. Looking ahead: This week, we expect consumer confidence data and a key inflation metric.

Report Releases—May 20–24, 2024

Existing Home Sales: April (Wednesday)

The pace of existing home sales unexpectedly slowed for the second consecutive month.

-Expected/prior month existing home sales change: +0.8%/–3.7%

-Actual existing home sales change: –1.9%

Federal Open Market Committee (FOMC) Meeting Minutes: May (Wednesday)

The minutes from the May FOMC meeting showed a hawkish tilt at the Federal Reserve (Fed), with many participants believing a higher-for-longer interest rate environment is needed to combat inflation.

S&P Global US Composite PMIs: May (Thursday)

Manufacturing and services segments surprised to the upside. Manufacturing reached expansionary territory, rising from 50 to 50.9; services moved from 51.3 to 54.8.

-Expected/prior US Composite PMI: 51.1/51.3

-Actual US Composite PMI: 54.4

Durable Goods: April (Friday)
Industrial durable goods orders were better than expected in April, with defense and transportation the two major drivers.

-Expected/prior month change: –1%/+2.6%

-Actual production change: +0.7%

The Takeaway

-Existing home sales surprised to the downside in April amid rising rates and a more hawkish tone from the Fed.

-Services and manufacturing segments improved notably in May. Durable goods surprised to the upside in April.

Financial Market Data

Equity

Source: Bloomberg, as of May 24, 2024

U.S. equities were mixed, with Nvidia earnings leading semiconductors higher in a narrow rally. Technology and communication services were the lone positive sectors. Energy and real estate each fell more than 3.7 percent; financials and consumer discretionary each lost at least 1.8 percent. The market continued to struggle, with softening data and persistent inflation in pockets of the economy such as shelter, auto insurance, and hospital costs.

Fixed Income

Source: Bloomberg, as of May 24, 2024

The short-to-intermediate portion of the yield curve (i.e., maturities of 1–5 years) moved higher. The 2-year increased 12 basis points (bps), closing at 4.95 percent amid concerns that the Fed will cut rates and inflation will remain elevated.

The Takeaway

-Equities were led by Nvidia earnings, which paced a very narrow rally.

-Treasury yields moved higher. Bond investors are questioning the impact of potential rate cuts this fall.

Looking Ahead

The focus this week will be on consumer confidence and inflation. The highlight will be the April release of the Personal Consumption Expenditures Price Index (Core PCE), a key inflation gauge for the Fed.

-The week kicks off Tuesday with the release of the Conference Board Consumer Confidence Index for May. Consumer confidence is expected to dip modestly, which would mark three consecutive months with falling confidence.

-On Wednesday, the Fed’s Beige Book, which summarizes economic conditions across the 12 Fed districts, will be released.

-We expect the second release of first-quarter gross domestic product (GDP) data on Thursday. It’s expected to be revised downward from 1.6 percent to an annualized 1.2 percent.

-Finally, on Friday, Core PCE will be released. This key inflation metric for the central bank is expected to be 2.8 percent year-over-year.

Disclosures: This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

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 Bloomberg US 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 Bloomberg US 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 Bloomberg US Municipal 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. One basis point is equal to 1/100th of 1 percent, or 0.01 percent.

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.

© 2024 Commonwealth Financial Network

Presented by Mark Gallagher

Equities continued their rally as those sectors that benefited from more persistent inflation outperformed. U.S. Treasuries were little changed as investors wait for this week’s inflation data.

Quick Hits

1. Report releases: Consumer sentiment fell by more than expected in May.
2. Financial market data: Utilities, financials, and staples rally on the potential of higher for longer.
3. Looking ahead: This week will be busy on the economic front with inflation, retail sales, housing, and industrial production all in focus.

Report Releases—May 6–10, 2024

Consumer Credit, March (Tuesday)

Consumer credit came in below expectations in March. This is a trailing measure but confirms some of the recent trends we have seen in waning consumer confidence.

-Expected/Prior Month Consumer Credit: $14.130B/$14.125B

-Actual Consumer Credit: $6.274B

Fed Speaker Commentary

There were numerous Federal Reserve (Fed) speakers providing commentary this past week including Tom Barkin, John Williams, Neel Kashkari, Susan Collins, Mary Daly, Lorie Logan, Austan Goolsbee, among others. The commentary was mixed with Kashkari issuing concerns over inflation staying at its current level. Barkin, on the other hand, said he thought rates were weighing on the economy.

MBA Mortgage Applications, Week ending May 3 (Wednesday).

Mortgage Applications tend to be volatile on a weekly basis but the recent move lower in rates did coincide with increased demand for the week ending May 3.

-Prior Weekly Mortgage Application Change: -2.3%

-Actual Weekly Mortgage Application Change: 2.6%

Preliminary University of Michigan Consumer Sentiment Survey, May (Friday)
Consumer sentiment fell by more than expected in May due to worsening consumer views on the current economic conditions as well as a drop in expectations for the future.

-Expected/Prior Month Consumer Sentiment Index: 76.2/77.2

-Actual Consumer Sentiment Index: 67.4

The Takeaway

-The Fed Governors remain mixed in the near-term policy stance—not ruling out hikes—but also believe the prior hikes continue to weigh on the economy.

-Consumer confidence fell by more than expected as consumers continue to be concerned about the level of inflation.

Financial Market Data

Equity

Source: Bloomberg, as of May 10, 2024

The market saw a broadening out of this year’s rally as we move deeper into earnings season. Utilities, financials, materials, and consumer staples led the way. Technology, energy, and consumer discretionary were underperformers as investors look to risk-off and higher for longer rate names. JP Morgan Chase (JPM), Costco (COST), and NextEra (NEE) were all up more than 4 percent on the week. The move in Costco came even as April sales missed expectations.

Fixed Income

Source: Bloomberg, as of May 10, 2024

Treasuries were relatively subdued last week. The 10-year Treasury ended flat at 4.50 percent. This week will have a greater amount of economic data with both Producer and Consumer Price Indices due. As a result, there could potentially be larger moves in the treasury market.

The Takeaway

-Equities saw a broadening out of its rally as higher for longer sectors benefited.

-Treasuries saw little movement ahead of this week’s inflation data.

Looking Ahead

This week will be busy on the economic front with inflation, retail sales, housing, and industrial production all in focus.

-Wednesday will be the busiest day of the week in terms of economic data. The Consumer Price Index and Retail Sales reports for April are due out at 8:30 a.m. Consumer inflation is set to slow on a year-over-year basis in April, with both headline and core inflation expected to moderate during the month. Retail sales are expected to show continued growth in April, which would mark three consecutive months with rising sales if estimates prove to be accurate.

-Later that morning we will see the release of the Home Builders Housing Market Index for May. Economists expect to see unchanged home builder confidence in May, which would leave the index in expansionary territory during the month.

-Finally, Thursday will see the release of Industrial Production for April. Industrial production growth is expected in April, supported by continued manufacturing production during the 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 Bloomberg U.S. 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 Bloomberg U.S. 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 Bloomberg U.S. Municipal 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. One basis point is equal to 1/100th of 1 percent, or 0.01 percent.

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.

© 2024 Commonwealth Financial Network