Presented by Mark Gallagher
General market news
• The 10-year Treasury yield opened this Tuesday morning at 2.44 percent, down from a high of 2.51 percent last week. The 30-year yield began the week at 3.04 percent, also down from last week’s high of 3.10 percent.
• Markets moved higher last week, with the S&P 500 Index gaining 1.60 percent and both the Nasdaq Composite and Dow Jones Industrial Average posting gains of 1.88 percent. The upward move came as a result of strong economic data, particularly in the retail and manufacturing spaces. January retail sales rose 0.4 percent, and December sales were revised up. In other positive news, the Philadelphia Fed’s manufacturing index hit a 33-year high. The financial, health care, and technology sectors led the way last week, with energy, telecom, and real estate lagging.
• In light of recent improvements in the economy, Federal Reserve Chair Janet Yellen took a more hawkish tone last week in remarks to the Senate Banking Committee, stating that it would be risky to wait too long to raise rates. Her comments have increased expectations for a rate hike in the first half of the year.
• January inflation data was released last week, and prices showed some upward pressure. The headline Producer Price Index rose 0.6 percent in January, driven by a surge in energy costs, with core prices up 0.4 percent. Perhaps more significant, the Consumer Price Index was up more than expected, increasing 0.6 percent at the headline level in January, with core prices up 0.3 percent. Energy skewed consumer prices higher, and gains were seen in apparel, housing, and medical care.
| Equity Index | Week-to-Date | Month-to-Date | Year-to-Date | 12-Month |
| S&P 500 | 1.60% | 3.36% | 5.32% | 24.68% |
| Nasdaq Composite | 1.88% | 4.12% | 8.64% | 30.36% |
| DJIA | 1.88% | 4.13% | 4.77% | 28.67% |
| MSCI EAFE | 0.86% | 1.43% | 4.37% | 16.43% |
| MSCI Emerging Markets | 0.97% | 3.31% | 8.98% | 31.15% |
| Russell 2000 | 0.82% | 2.86% | 3.27% | 40.52% |
Source: Bloomberg
| Fixed Income Index | Month-to-Date | Year-to-Date | 12-Month |
| U.S. Broad Market | 0.24% | 0.44% | 1.14% |
| U.S. Treasury | 0.14% | 0.37% | –1.62% |
| U.S. Mortgages | 0.22% | 0.19% | 0.24% |
| Municipal Bond | 0.06% | 0.72% | –0.60% |
Source: Morningstar Direct
What to look forward to
We’ll see a handful of economic news releases in this holiday-shortened week.
The focus will be housing data, with releases of Existing and New Home Sales for January. Both measures are expected to show improvement.
We will also see the latest Federal Open Market Committee meeting minutes.
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 Barclays 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 Barclays 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 Barclays 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.
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.
© 2017 Commonwealth Financial Network®