Monthly Archives: March 2018

Market Week: March 26, 2018

The Markets (as of market close March 23, 2018)

Volatility is the catchword when describing the market lately. Investors had better buckle up for a bumpy ride from here on, at least according to indications from the Chicago Board Options Exchange (Cboe) Volatility Index®, which attempts to provide a forward-looking expectation of price fluctuation in the S&P 500 based on stock option trading. The Cboe Volatility Index® soared from 15.80 on March 16 to 24.87 last Friday. Last week’s market performance was one of the worst in years, with the S&P 500 suffering its biggest drop since the beginning of 2016. The tech-heavy Nasdaq exceeded the losses suffered by the large-cap index, falling over 6.50%. The prospect of escalating trade tensions is also weighing on investors as indicated by last Thursday’s sell-off following the Trump administration’s call for tariffs on Chinese imports.

The price of crude oil (WTI) surged last week, closing at $65.74 per barrel early Friday evening, ahead of the prior week’s closing price of $62.25 per barrel. The price of gold (COMEX) also climbed to $1,352.90 by early Friday evening, rising from the prior week’s price of $1,313.90. The national average retail regular gasoline price increased to $2.598 per gallon on March 19, 2018, $0.039 higher than the prior week’s price and $0.277 more than a year ago.

Market/Index 2017 Close Prior Week As of 3/23 Weekly Change YTD Change
DJIA 24719.22 24946.51 23533.20 -5.67% -4.80%
Nasdaq 6903.39 7481.99 6992.67 -6.54% 1.29%
S&P 500 2673.61 2752.01 2588.26 -5.95% -3.19%
Russell 2000 1535.51 1586.05 1510.08 -4.79% -1.66%
Global Dow 3085.41 3121.33 2988.62 -4.25% -3.14%
Fed. Funds target rate 1.25%-1.50% 1.25%-1.50% 1.50%-1.75% 25 bps 25 bps
10-year Treasuries 2.41% 2.84% 2.81% -3 bps 40 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic Headlines

·         Citing continued strengthening of the labor market and moderate rising of economic activity, the Federal Open Market Committee decided to increase the target range for the federal funds rate 25 basis points to 1.50% to 1.75%. The Committee raised the target range despite inflation that continues to run below the Fed’s target rate of 2.0%. Two more rate hikes remain likely during the remainder of 2018.

·         Sales of existing homes picked up the pace in February following two consecutive monthly declines. Existing home sales grew 3.0% for the month, and are now 1.1% above a year ago. The median existing home price expanded for the 72nd straight month in February, increasing to $241,700, which is up 5.9% from February 2017 ($228,200). Helping drive sales was an increase in existing home inventory, which rose 4.6% (still 8.1% lower than a year ago). There is a 3.4-month supply of unsold inventory at the current sales pace, compared to a 3.8-month supply in January. Despite surging prices and low inventories, the uptick in sales of existing homes is likely attributable to a healthy economy.

·         New home sales slipped in February, down 0.6% from their January pace. Nevertheless, sales are still 0.5% ahead of their February 2017 estimate. The median sales price of new houses sold in February 2018 was $326,800. The average sales price was $376,700. Inventory of new homes for sale represents a supply of about 5.9 months at the current sales rate.

·         The manufacturing sector bounced back in February as new orders for durable goods increased by 3.1% for the month, compared to January’s 3.5% drop. Excluding transportation, which led the increase (up 7.1%), new orders increased 1.2%. Shipments, inventories, and unfilled orders also increased in February. New orders are up 8.9% year-over-year, while core capital goods (excluding defense and transportation) are up an impressive 8.0% over last year.

·         In the week ended March 17, there were 229,000 initial claims for unemployment insurance, an increase of 3,000 from the previous week’s level. The advance insured unemployment rate remained at 1.3% for the week ended March 10. The advance number of those receiving unemployment insurance benefits during the week ended March 10 was 1,828,000, a decrease of 57,000 from the prior week’s level, which was revised up by 6,000. This is the lowest level for insured unemployment since December 29, 1973, when it was 1,805,000.

Eye on the Week Ahead

The third and final release for the fourth-quarter gross domestic product is available this week. The annualized rate of growth is expected to remain about 2.5% for the quarter. Also worth noting this week is the international trade in goods report for February. The trade deficit continues to widened, as the cost of imports regularly outpace exports.

Data sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market data: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

IMPORTANT DISCLOSURES

Content has been provided by Broadridge Investor Communication Solutions, Inc.  Broadridge does not provide Investment, tax or legal advice.  The information presented here is not specific to any individual’s personal circumstances.

This publication is provided as a service to clients and associates of PFA solely for their own use and information.  The material is derived from sources believed to be reliable but its accuracy and the opinions based thereon are not guaranteed and have not been verified.  The content in this publication is for general information and education purposes only and not intended to serve as individual investment advice.  You should seek independent advice from a professional based on your individual circumstances.  The information in these materials may change at any time without notice.  To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

This communication is strictly intended for individuals residing in the state(s) of CA, FL, IL, MO and TX. No offers may be made or accepted from any resident outside the specific states referenced.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018.

Market Week: March 19, 2018

 

The Markets (as of market close March 16, 2018)

Market volatility has been fueled by investor concerns of accelerating inflation. However, last week’s Consumer Price Index, retail sales, and Producer Price Index reports showed inflationary trends in February were subdued. Nevertheless, stocks posted weekly losses, possibly resulting from investor fears that the administration’s trade policy could drive up costs for domestic manufacturers. Each of the indexes listed here lost value by last week’s end, led by the large caps of the Dow and S&P 500, followed closely by the Nasdaq, which dropped a little over 1.0%. The small caps of the Russell 2000 and the Global Dow outperformed larger shares. Treasury yields receded as bond prices advanced, possibly reflecting the weak inflation data previously referenced.

The price of crude oil (WTI) rose slightly last week, closing at $62.25 per barrel early Friday evening, ahead of the prior week’s closing price of $62.12 per barrel. The price of gold (COMEX) dipped to $1,313.90 by early Friday evening, down from the prior week’s price of $1,324.00. The national average retail regular gasoline price decreased to $2.559 per gallon on March 12, 2018, $0.001 less than the prior week’s price and $0.236 higher than a year ago.

Market/Index 2017 Close Prior Week As of 3/16 Weekly Change YTD Change
DJIA 24719.22 25335.74 24946.51 -1.54% 0.92%
Nasdaq 6903.39 7560.81 7481.99 -1.04% 8.38%
S&P 500 2673.61 2786.57 2752.01 -1.24% 2.93%
Russell 2000 1535.51 1597.14 1586.05 -0.69% 3.29%
Global Dow 3085.41 3143.16 3121.33 -0.69% 1.16%
Fed. Funds target rate 1.25%-1.50% 1.25%-1.50% 1.25%-1.50% 0 bps 0 bps
10-year Treasuries 2.41% 2.89% 2.84% -5 bps 43 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic Headlines

·         The prices consumers paid for goods and services increased 0.2% in February after rising 0.5% in January. Over the last 12 months, consumer prices have risen 2.2%. Consumer prices less food and energy rose 1.8% over the past year. Price pressures over the first two months of the year have yet to appear, contrary to some opinions that inflation is on the rise. The February price increase is primarily attributable to a 0.3% advance in services — prices for goods dipped 0.1%.

·         The prices producers received for goods and services advanced 0.2% in February, and are up 2.8% from February 2017. Producer prices rose 0.4% in January. Prices less food and energy also increased 0.2% for the month and 2.5% for the year.

·         Sales at the retail level fell in February for the third consecutive month, as consumers held off buying automobiles and other big-ticket items. A big tax cut, high consumer confidence in the economy, and a flourishing job market haven’t been enough to send consumers on a spending spree. Retail sales fell 0.1% in February following January’s revised dip of 0.1%. Not since 2012 have retail sales fallen three consecutive months.

·         The federal government deficit expanded to $215.25 billion in February, following a $49 billion surplus the previous month. Government receipts were $155.62 billion, while government outlays totaled $370.87 billion. Through the first five months of the 2018 fiscal year, the deficit sits at $390.97 billion compared to $350.62 billion over the same period last year — an increase of 11.5%.

·         Building permits and housing starts both dipped in February. Permits for all types of privately owned housing units fell 5.7% below the January rate. Single-family building permits slipped only 0.6%. Privately owned housing starts came in 7.0% below the January level, although single-family starts were up 2.9%. A positive from the report came from housing completions, which were 7.8% ahead of January’s figures. Single-family housing completions in February were 3.0% above the January rate.

·         According to the Federal Reserve’s report, industrial production rose 1.1% in February following a decline of 0.3% in January. Manufacturing production increased 1.3%, its largest gain since October. Mining output jumped 4.3%, mostly reflecting strong gains in oil and gas extraction. The index for utilities fell 4.7%, as warmer-than-normal temperatures last month reduced the demand for heating. Capacity utilization for the industrial sector climbed 0.7 percentage point in February to 78.1%, its highest reading since January 2015.

·         Prices paid by the United States for imports continue to advance at a faster pace than the prices for goods sold by U.S. manufacturers to foreign countries. The price index for U.S. imports rose 0.4% in February, the seventh consecutive monthly increase, after advancing 0.8% in January. The last time the index declined on a monthly basis was a 0.2% drop in July 2017. Import prices advanced 3.5% for the 12-month period ended in February, matching the 12-month rise in November. Those were the largest annual increases since the index rose 3.6% for the 12-month period ended April 2017. Export prices increased 0.2% in February after rising 0.8% in January. The last time the index declined on a monthly basis was a 0.1% decrease in June 2017. The price index for U.S. exports increased 3.3% over the past 12 months.

·         The labor sector remained steady, according to the Job Openings and Labor Turnover summary. January saw the number of job openings increase to 6.3 million, over 600,000 more than December. Overall, the number of hires remained relatively the same in January, as did total separations. Job openings increased in professional and business services, transportation, warehousing, and utilities. There were 1.8 million layoffs and discharges in January, with increases in health care and social assistance. Over the 12 months ended in January, hires totaled 65.4 million and separations totaled 63.2 million, yielding a net employment gain of 2.1 million.

·         In the week ended March 10, there were 226,000 initial claims for unemployment insurance, a decrease of 4,000 from the previous week’s level, which was revised down by 1,000. The advance insured unemployment rate remained at 1.3% for the week ended March 3. The advance number of those receiving unemployment insurance benefits during the week ended March 3 was 1,879,000, an increase of 4,000 from the prior week’s level, which was revised up by 5,000.

Eye on the Week Ahead

Of particular interest to investors, the Federal Open Market Committee meets next week, after which it is expected to increase interest rates based on favorable economic conditions and strengthening in the labor sector. Inflationary pressures, which have been subdued, should not factor into the Committee’s decision.

Data sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market data: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

IMPORTANT DISCLOSURES

Content has been provided by Broadridge Investor Communication Solutions, Inc.  Broadridge does not provide Investment, tax or legal advice.  The information presented here is not specific to any individual’s personal circumstances.

This publication is provided as a service to clients and associates of PFA solely for their own use and information.  The material is derived from sources believed to be reliable but its accuracy and the opinions based thereon are not guaranteed and have not been verified.  The content in this publication is for general information and education purposes only and not intended to serve as individual investment advice.  You should seek independent advice from a professional based on your individual circumstances.  The information in these materials may change at any time without notice.  To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

This communication is strictly intended for individuals residing in the state(s) of CA, FL, IL, MO and TX. No offers may be made or accepted from any resident outside the specific states referenced.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018.

Market Week: March 19, 2018

 

The Markets (as of market close March 16, 2018)

Market volatility has been fueled by investor concerns of accelerating inflation. However, last week’s Consumer Price Index, retail sales, and Producer Price Index reports showed inflationary trends in February were subdued. Nevertheless, stocks posted weekly losses, possibly resulting from investor fears that the administration’s trade policy could drive up costs for domestic manufacturers. Each of the indexes listed here lost value by last week’s end, led by the large caps of the Dow and S&P 500, followed closely by the Nasdaq, which dropped a little over 1.0%. The small caps of the Russell 2000 and the Global Dow outperformed larger shares. Treasury yields receded as bond prices advanced, possibly reflecting the weak inflation data previously referenced.

The price of crude oil (WTI) rose slightly last week, closing at $62.25 per barrel early Friday evening, ahead of the prior week’s closing price of $62.12 per barrel. The price of gold (COMEX) dipped to $1,313.90 by early Friday evening, down from the prior week’s price of $1,324.00. The national average retail regular gasoline price decreased to $2.559 per gallon on March 12, 2018, $0.001 less than the prior week’s price and $0.236 higher than a year ago.

Market/Index 2017 Close Prior Week As of 3/16 Weekly Change YTD Change
DJIA 24719.22 25335.74 24946.51 -1.54% 0.92%
Nasdaq 6903.39 7560.81 7481.99 -1.04% 8.38%
S&P 500 2673.61 2786.57 2752.01 -1.24% 2.93%
Russell 2000 1535.51 1597.14 1586.05 -0.69% 3.29%
Global Dow 3085.41 3143.16 3121.33 -0.69% 1.16%
Fed. Funds target rate 1.25%-1.50% 1.25%-1.50% 1.25%-1.50% 0 bps 0 bps
10-year Treasuries 2.41% 2.89% 2.84% -5 bps 43 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic Headlines

·         The prices consumers paid for goods and services increased 0.2% in February after rising 0.5% in January. Over the last 12 months, consumer prices have risen 2.2%. Consumer prices less food and energy rose 1.8% over the past year. Price pressures over the first two months of the year have yet to appear, contrary to some opinions that inflation is on the rise. The February price increase is primarily attributable to a 0.3% advance in services — prices for goods dipped 0.1%.

·         The prices producers received for goods and services advanced 0.2% in February, and are up 2.8% from February 2017. Producer prices rose 0.4% in January. Prices less food and energy also increased 0.2% for the month and 2.5% for the year.

·         Sales at the retail level fell in February for the third consecutive month, as consumers held off buying automobiles and other big-ticket items. A big tax cut, high consumer confidence in the economy, and a flourishing job market haven’t been enough to send consumers on a spending spree. Retail sales fell 0.1% in February following January’s revised dip of 0.1%. Not since 2012 have retail sales fallen three consecutive months.

·         The federal government deficit expanded to $215.25 billion in February, following a $49 billion surplus the previous month. Government receipts were $155.62 billion, while government outlays totaled $370.87 billion. Through the first five months of the 2018 fiscal year, the deficit sits at $390.97 billion compared to $350.62 billion over the same period last year — an increase of 11.5%.

·         Building permits and housing starts both dipped in February. Permits for all types of privately owned housing units fell 5.7% below the January rate. Single-family building permits slipped only 0.6%. Privately owned housing starts came in 7.0% below the January level, although single-family starts were up 2.9%. A positive from the report came from housing completions, which were 7.8% ahead of January’s figures. Single-family housing completions in February were 3.0% above the January rate.

·         According to the Federal Reserve’s report, industrial production rose 1.1% in February following a decline of 0.3% in January. Manufacturing production increased 1.3%, its largest gain since October. Mining output jumped 4.3%, mostly reflecting strong gains in oil and gas extraction. The index for utilities fell 4.7%, as warmer-than-normal temperatures last month reduced the demand for heating. Capacity utilization for the industrial sector climbed 0.7 percentage point in February to 78.1%, its highest reading since January 2015.

·         Prices paid by the United States for imports continue to advance at a faster pace than the prices for goods sold by U.S. manufacturers to foreign countries. The price index for U.S. imports rose 0.4% in February, the seventh consecutive monthly increase, after advancing 0.8% in January. The last time the index declined on a monthly basis was a 0.2% drop in July 2017. Import prices advanced 3.5% for the 12-month period ended in February, matching the 12-month rise in November. Those were the largest annual increases since the index rose 3.6% for the 12-month period ended April 2017. Export prices increased 0.2% in February after rising 0.8% in January. The last time the index declined on a monthly basis was a 0.1% decrease in June 2017. The price index for U.S. exports increased 3.3% over the past 12 months.

·         The labor sector remained steady, according to the Job Openings and Labor Turnover summary. January saw the number of job openings increase to 6.3 million, over 600,000 more than December. Overall, the number of hires remained relatively the same in January, as did total separations. Job openings increased in professional and business services, transportation, warehousing, and utilities. There were 1.8 million layoffs and discharges in January, with increases in health care and social assistance. Over the 12 months ended in January, hires totaled 65.4 million and separations totaled 63.2 million, yielding a net employment gain of 2.1 million.

·         In the week ended March 10, there were 226,000 initial claims for unemployment insurance, a decrease of 4,000 from the previous week’s level, which was revised down by 1,000. The advance insured unemployment rate remained at 1.3% for the week ended March 3. The advance number of those receiving unemployment insurance benefits during the week ended March 3 was 1,879,000, an increase of 4,000 from the prior week’s level, which was revised up by 5,000.

Eye on the Week Ahead

Of particular interest to investors, the Federal Open Market Committee meets next week, after which it is expected to increase interest rates based on favorable economic conditions and strengthening in the labor sector. Inflationary pressures, which have been subdued, should not factor into the Committee’s decision.

Data sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market data: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

IMPORTANT DISCLOSURES

Content has been provided by Broadridge Investor Communication Solutions, Inc.  Broadridge does not provide Investment, tax or legal advice.  The information presented here is not specific to any individual’s personal circumstances.

This publication is provided as a service to clients and associates of PFA solely for their own use and information.  The material is derived from sources believed to be reliable but its accuracy and the opinions based thereon are not guaranteed and have not been verified.  The content in this publication is for general information and education purposes only and not intended to serve as individual investment advice.  You should seek independent advice from a professional based on your individual circumstances.  The information in these materials may change at any time without notice.  To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

This communication is strictly intended for individuals residing in the state(s) of CA, FL, IL, MO and TX. No offers may be made or accepted from any resident outside the specific states referenced.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018.

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Market Week: March 12, 2018

The Markets (as of market close March 9, 2018)

Last week’s jobs report appears to have quelled investor fears, at least for the time being. Each of the indexes listed here posted impressive weekly gains, led by the tech-heavy Nasdaq and the small-cap Russell 2000, each of which gained over 4.0%. While the February employment figures saw over 300,000 new jobs added, meager wage growth didn’t support accelerating inflation. Last week’s rebound also pushed the major indexes ahead of their 2017 year-end values.

The price of crude oil (WTI) rose last week, closing at $62.12 per barrel early Friday evening, ahead of the prior week’s closing price of $61.45 per barrel. The price of gold (COMEX) climbed to $1,324.00 by early Friday evening, up from the prior week’s price of $1,323.70. The national average retail regular gasoline price increased to $2.560 per gallon on March 5, 2018, $0.012 greater than the prior week’s price and $0.219 higher than a year ago.

Market/Index 2017 Close Prior Week As of 3/9 Weekly Change YTD Change
DJIA 24719.22 24538.06 25335.74 3.25% 2.49%
Nasdaq 6903.39 7257.87 7560.81 4.17% 9.52%
S&P 500 2673.61 2691.25 2786.57 3.54% 4.22%
Russell 2000 1535.51 1533.17 1597.14 4.17% 4.01%
Global Dow 3085.41 3065.64 3143.16 2.53% 1.87%
Fed. Funds target rate 1.25%-1.50% 1.25%-1.50% 1.25%-1.50% 0 bps 0 bps
10-year Treasuries 2.41% 2.86% 2.89% 3 bps 48 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic Headlines

·         February saw 313,000 new jobs added, according to the latest employment report from the Bureau of Labor Statistics. Notable job gains occurred in construction (61,000), retail trade (50,000), professional and business services (50,000), and manufacturing (31,000). The unemployment rate remained at 4.1% for the fifth consecutive month. The average workweek for all employees rose by 0.1 hour to 34.5 hours in February. Average hourly earnings for all employees rose by $0.04 to $26.75, following a $0.07 gain in January. Over the year, average hourly earnings have increased by $0.68, or 2.6%. Overall, the number of significant new jobs added is a positive, while wages increased by only 0.1% for the month. The year-over-year gain slowed in February (2.6%) compared to January (2.9%), which was the largest gain since 2009. This should be positive news for investors who shunned the market for fear of rising inflation and interest rates.

·         The non-manufacturing (services) sector of the economy expanded in February, but at a slightly slower pace than the previous month, according to the latest report from the Institute for Supply Management. Supply managers indicated that manufacturing business activity, and new orders expanded, while employment and prices decreased last month. According to the report, the majority of respondents remain positive about business conditions and the economy.

·         A report that could bolster President Trump’s trade policy of increasing tariffs on imports, January’s goods and services trade deficit expanded sharply to $56.6 billion, up $2.7 billion from the $53.9 billion December revised deficit. In January, exports narrowed by $2.7 billion, while imports remained relatively the same, down less than $0.1 billion from December’s imports. Year-over-year, the goods and services deficit increased $7.9 billion, or 16.2%, from January 2017. Exports increased $9.7 billion, or 5.1%. Imports increased $17.6 billion, or 7.4%.

·         In the week ended March 3, there were 231,000 initial claims for unemployment insurance, an increase of 21,000 from the previous week’s level. The advance insured unemployment rate dipped to 1.3% for the week ended February 24. The advance number of those receiving unemployment insurance benefits during the week ended February 24 was 1,870,000, a decrease of 64,000 from the prior week’s level, which was revised up by 3,000.

Eye on the Week Ahead

Fears of rising inflation and interest rates have worried investors over the past several weeks. Important inflationary indicators are out this week with the Consumer Price Index, Producer Price Index, and retail sales report. While consumer spending has been modest, prices for consumer goods and services have been rising in a sure sign of inflationary pressures.

Data sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market data: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

IMPORTANT DISCLOSURES

Content has been provided by Broadridge Investor Communication Solutions, Inc.  Broadridge does not provide Investment, tax or legal advice.  The information presented here is not specific to any individual’s personal circumstances.

This publication is provided as a service to clients and associates of PFA solely for their own use and information.  The material is derived from sources believed to be reliable but its accuracy and the opinions based thereon are not guaranteed and have not been verified.  The content in this publication is for general information and education purposes only and not intended to serve as individual investment advice.  You should seek independent advice from a professional based on your individual circumstances.  The information in these materials may change at any time without notice.  To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

This communication is strictly intended for individuals residing in the state(s) of CA, FL, IL, MO and TX. No offers may be made or accepted from any resident outside the specific states referenced.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018.

Market Week: March 5, 2018

The Markets (as of market close March 2, 2018)

Trade wars: That was the ominous phrase that spooked many investors toward week’s end, as President Trump announced plans to implement a tariff of 25% on steel imports and 10% on aluminum imports. While no one can say for certain whether such tariffs will actually materialize, Trump’s pronouncements were enough to send stocks tumbling on Thursday and Friday morning, only to recover somewhat by the market’s close Friday afternoon. Unfortunately, the recovery wasn’t enough to stave off weekly losses on all the indexes tracked here, led by the Dow, which closed the week down more than 3%. Year to date, only the Nasdaq and S&P 500 remain in positive territory.

Crude oil (WTI) lost ground last week, closing at $61.45 per barrel early Friday evening, down from the prior week’s closing price of $63.57 per barrel. The price of gold (COMEX) fell to $1,323.70 by early Friday evening, down from the prior week’s price of $1,330.70. The national average retail regular gasoline price decreased for the second week in a row to $2.548 per gallon on February 26, 2018, $0.009 lower than the prior week’s price but $0.234 higher than a year ago.

Market/Index 2017 Close Prior Week As of 3/2 Weekly Change YTD Change
DJIA 24719.22 25309.99 24538.06 -3.05% -0.73%
Nasdaq 6903.39 7337.39 7257.87 -1.08% 5.13%
S&P 500 2673.61 2747.30 2691.25 -2.04% 0.66%
Russell 2000 1535.51 1549.19 1533.17 -1.03% -0.15%
Global Dow 3085.41 3152.06 3065.64 -2.74% -0.64%
Fed. Funds target rate 1.25%-1.50% 1.25%-1.50% 1.25%-1.50% 0 bps 0 bps
10-year Treasuries 2.41% 2.86% 2.86% 0 bps 45 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic Headlines

·         The net value of goods and services produced in the United States, as measured by the gross domestic product, increased at an annual rate of 2.5% in the fourth quarter of 2017, according to the second estimate released by the Bureau of Economic Analysis. In the third quarter, the GDP increased by 3.2%. The price index for gross domestic purchases (a measure of price changes in goods and services) increased 2.5% in the fourth quarter, compared with an increase of 1.7% in the third quarter. The personal consumption expenditures price index (which measures the increase in prices paid for personal consumption) increased 2.7%, compared with an increase of 1.5%. Excluding food and energy prices, the PCE price index increased 1.9%, compared with an increase of 1.3%. Consumer spending increased 3.8% compared to the third quarter, as purchases of durable goods jumped 13.8%.

·         Personal (pre-tax) earnings rose 0.4% in January, the same increase as December, according to the latest report from the Bureau of Economic Analysis. After-tax income surged ahead by 0.9%, which matches the largest such gain since December 2012, reflective of the tax-law changes taking effect in January. Despite increased income, consumers didn’t spend significantly more, as personal consumption expenditures rose by only 0.2% over December’s rate. Instead of spending, consumers apparently added their newfound income to savings, which jumped 3.2% in January.

·         Manufacturing output expanded in February, but at a slightly slower pace than January, according to the IHS Markit final U.S. Manufacturing Purchasing Managers’ Index™ (PMI™). The PMI™ registered 55.3 in February, down slightly from 55.5 in January. The advance in production was attributable to greater client demand. New business expanded at a faster pace, while input prices increased at the fastest pace since December 2012.

·         The Institute for Supply Management’s Report On Business® reported similar results as Markit’s submission. The ISM® Purchasing Managers’ Index registered 60.8% in February, an increase of 1.7 percentage points from the January reading. However, ISM® respondents reported a slight decrease in new orders and production. Employment increased substantially, as did prices.

·         New home sales fell 7.8% in January and 1.0% below their pace from a year ago. The median sales price of new homes sold in January was $323,000. The average sales price was $382,700. The seasonally adjusted estimate of new houses for sale at the end of January was 301,000. This represents a supply of 6.1 months at the current sales rate. While new home sales were soft in January, inventory increased 10.9% and the average sales price fell 3.1% — factors which should help spur sales in February.

·         Orders for long-lasting products (durable goods) slipped in January, according to the latest report from the Census Bureau. New orders decreased $9.2 billion, or 3.7%, for the month following two consecutive monthly increases. Unfilled orders, down following four consecutive monthly increases, decreased $3.1 billion, or 0.3%, to $1,140.9 billion. On the plus side of the report, both shipments ($0.6 billion, or 0.2%) and inventories ($1.3 billion, or 0.3%) increased in January over December.

·         The advance report on international trade in goods saw the deficit increase by $2.1 billion in January over December. Exports of goods for January were $133.9 billion, $3.1 billion less than December exports. Imports of goods for January were $208.3 billion, $0.9 billion less than December imports. Wholesale inventories increased 0.7%, while retail inventories advanced 0.8%.

·         The Conference Board Consumer Confidence Index® increased in February, following a modest increase in January. Coming in at 130.8, this is the highest level since November 2000. According to the report, “despite the recent stock market volatility, consumers expressed greater optimism about short-term prospects for business and labor market conditions, as well as their financial prospects.”

·         In the week ended February 24, there were 210,000 initial claims for unemployment insurance, a decrease of 10,000 from the previous week’s level, which was revised down by 2,000. This is the lowest level for initial claims since December 6, 1969, when it was 202,000. The advance insured unemployment rate inched up to 1.4% for the week ended February 17. The advance number of those receiving unemployment insurance benefits during the week ended February 17 was 1,931,000, an increase of 57,000 from the prior week’s level, which was revised down by 1,000.

Eye on the Week Ahead

The important monthly employment report for February is out this week. Pay close attention to wage appreciation as another sign of building inflationary pressure. Also, the international trade report for January is out. It is expected to reveal an expanding goods and services trade deficit.

Data sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market data: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

IMPORTANT DISCLOSURES

Content has been provided by Broadridge Investor Communication Solutions, Inc.  Broadridge does not provide Investment, tax or legal advice.  The information presented here is not specific to any individual’s personal circumstances.

This publication is provided as a service to clients and associates of PFA solely for their own use and information.  The material is derived from sources believed to be reliable but its accuracy and the opinions based thereon are not guaranteed and have not been verified.  The content in this publication is for general information and education purposes only and not intended to serve as individual investment advice.  You should seek independent advice from a professional based on your individual circumstances.  The information in these materials may change at any time without notice.  To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

This communication is strictly intended for individuals residing in the state(s) of CA, FL, IL, MO and TX. No offers may be made or accepted from any resident outside the specific states referenced.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018.

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