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May 8, 2017 - Markets Stay Steady

| May 08, 2017
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Last week, stocks rose but floated within a narrow trading range. By Friday, however, both the S&P 500 and the NASDAQ reached record highs.[1] For the week, the S&P 500 gained 0.63%, the Dow finished up 0.32%, and the NASDAQ rose 0.88%.[2] The MSCI EAFE added 1.7%.[3]

Overall, we experienced another week of generally positive, but somewhat mixed, economic signals. Soft auto sales and tumbling oil prices offset increased job creation and the lowest unemployment recorded in a decade.[4]

POSITIVE MARKET NEWS

  • Increased Job Creation and Low Unemployment

    In April, U.S. payrolls added 211,000 jobs, exceeding the 190,000 predicted and showing a significant bounce back from March's 79,000 increase. The jobless rate also dropped to 4.4% - the lowest it has been since May 2007.[5] The economy added jobs in several industries:[6]

    • Leisure and hospitality: +55,000 jobs
    • Health care: +20,000 jobs
    • Mining: +9,000 jobs
    • Professional and business services: +39,000 jobs
    • Government: +17,000 jobs
  • Strong Corporate Earnings

    First quarter earnings season continued last week, and U.S. companies once again reported strong results. So far, companies with majority overseas profits are reporting an average revenue growth of 19.9%, outperforming S&P 500 companies with domestic earnings only. This difference helps explain how corporations are reporting strong Q1 earnings despite sluggish economic growth in the U.S. during the same period.[7]

  • Decent Manufacturing and Service Reports

    The ISM Manufacturing Index fell in April to 54.8 but remains in positive territory. The report is above 2016's 51.5 average and suggests continued manufacturing growth. Meanwhile, the PMI Manufacturing Index reported a 0.5 loss in April at 52.8.[8] However, the PMI Services Index rose from 52.8 in March to 53.1 in April.[9] While the month-over-month declines may show a pause in manufacturing, numbers above 50 indicate growth.[10]

MIXED SIGNALS

  • Auto Sales Below Expectations

    U.S. motor vehicle sales bounced up to an annualized rate of 16.9 million. Though April's report falls below the predicted 17.2 million, it improves on March's 16.6 million annualized rate.[11]

  • Oil Prices Tumble

    Oil prices tumbled last week. Both June West Texas Intermediate (WTI) crude and July Brent crude finished the week down. WTI closed at $46.22 a barrel, falling approximately 6.3% below last week's close. Brent crude fell by about 5.6% for the week to $49.10 a barrel.[12]

LOOKING AHEAD

On Wednesday, May 3, the Federal Open Market Committee (FOMC) announced it would keep the federal funds target range at 0.75% to 1.00%. Nonetheless, the Fed remains encouraged that the second-quarter GDP will rebound, because they believe consumer fundamentals remain solid.[13] This sentiment may indicate the FOMC will raise rates in their June meeting.[14]

On Sunday, Emmanuel Macron won the French presidential election, as expected. Macron's win should ease European Market concerns, as he is a centrist who supports global trade, the euro, and France's continuing membership in the EU.[15]

As we look ahead to this week, our analysis will include a variety of international and domestic focuses. In particular, consumer prices, retail sales, and business inventories will highlight economic reports for the week while oil prices also should remain in focus for investors.

ECONOMIC CALENDAR

Tuesday: JOLTS (tracks monthly changes in job openings)
Thursday: Jobless Report, Producer Price Index
Friday: Consumer Price Index, Retail Sales, Business Inventories, Consumer Sentiment

Notes: All index returns (except S&P 500) exclude reinvested dividends, and the 5- year and 10-year returns are annualized. The total returns for the S&P 500 assume reinvestment of dividends on the last day of the month. This may account for differences between the index returns published on Morningstar.com and the index returns published elsewhere. International performance is represented by the MSCI EAFE Index. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.


These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative, Broker dealer or Investment Advisor, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.


Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

Diversification does not guarantee profit nor is it guaranteed to protect assets.

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.

The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.

The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indices from Europe, Australia and Southeast Asia.

The S&P/Case-Shiller Home Price Indices are the leading measures of U.S. residential real estate prices, tracking changes in the value of residential real estate. The index is made up of measures of real estate prices in 20 cities and weighted to produce the index.

The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Past performance does not guarantee future results.

You cannot invest directly in an index.

Consult your financial professional before making any investment decision.

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  1. http://www.cnbc.com
  2. http://performance.morningstar.com
    http://performance.morningstar.com
    http://performance.morningstar.com
  3. https://www.msci.com
  4. http://wsj-us.econoday.com
    http://www.marketwatch.com
    https://www.bloomberg.com
  5. https://www.bloomberg.com
  6. http://www.cnbc.com
    http://wsj-us.econoday.com
  7. http://www.cnbc.com
  8. http://wsj-us.econoday.com
    https://www.bloomberg.com
  9. http://wsj-us.econoday.com
  10. https://www.bloomberg.com
  11. http://wsj-us.econoday.com
  12. http://www.marketwatch.com
  13. http://wsj-us.econoday.com
  14. http://www.cnbc.com
  15. http://money.cnn.com
    http://www.marketwatch.com
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