Presented by Mark Gallagher
General market news
• The 10-year Treasury yield went as high as 1.94 percent before the Federal Reserve’s meeting last week, opening at 1.81 percent early this Monday morning. The rates market has seen some volatility over the last week or two, with 10-year yields ranging from as low as 1.68 percent up to 1.94 percent.
• The bull run in equities hit a bit of a wall last week, with domestic and international indices all in negative territory. Earnings season has shed light on underlying weakness across the U.S. economy, reaching beyond the oil industry. Assisted by a weaker dollar, international markets continued their recent trend of better performance compared with domestic markets.
• A slew of economic reports confirmed a rather lackluster rate of activity in the U.S. Highlighting recent concerns, the release of first-quarter gross domestic product showed that the economy grew just 0.5 percent to start the year.
| Equity Index | Week-to-Date | Month-to-Date | Year-to-Date | 12-Month |
| S&P 500 | −1.24% | 0.39% | 1.74% | 1.20% |
| Nasdaq Composite | −2.65% | −1.89% | −4.23% | −2.10% |
| DJIA | −1.28% | 0.62% | 2.83% | 2.25% |
| MSCI EAFE | −0.07% | 3.33% | 0.37% | −8.51% |
| MSCI Emerging Markets | −0.10% | 1.03% | 6.78% | −17.19% |
| Russell 2000 | −1.37% | 1.57% | 0.02% | −5.95% |
Source: Bloomberg
| Fixed Income Index | Month-to-Date | Year-to-Date | 12-Month |
| U.S. Broad Market | 0.38% | 3.43% | 2.72% |
| U.S. Treasury | −0.11% | 3.09% | 2.83% |
| U.S. Mortgages | 0.16% | 2.14% | 2.56% |
| Municipal Bond | 0.74% | 2.42% | 5.29% |
Source: Morningstar Direct
What to look forward to
The week will begin with the release of the ISM Manufacturing Index, with activity expected to have been fairly flat in April.
Although growth has been muted, the economy remains sound overall, and we expect the ISM Non-Manufacturing Index to show a slight gain for April.
Finally, the Employment report is expected to show a solid gain in April nonfarm payrolls.
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.
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.
© 2016 Commonwealth Financial Network®