Last week, all four of the indexes we discuss in these market updates saw their performance stumble. The S&P 500 lost 1.44%, the Dow was down 1.52%, the NASDAQ gave back 1.22%, and the MSCI EAFE declined 0.07%.[1]
On Tuesday, March 21, the S&P 500 and Dow recorded 1% declines for the first time since Oct. 11, 2016.[2] By Friday, the S&P had posted its worst week since the election.[3] At the same time, 10-year Treasury yields fell and the dollar dropped for the second straight week.[4]
What happened?
As is typically the case, no simple answer can easily explain market behavior. Last week’s healthcare headlines—and the House of Representatives’ decision not to vote on the American Health Care Act of 2017—may have caught the attention of many people on Wall Street.[5] As a result, pundits will likely spend significant time debating what lies ahead for health care, tax reform, and other governmental policies. We again encourage you to look at the economic fundamentals rather than allowing news coverage to determine your financial confidence.
Recent Economic News
We did not receive a tremendous amount of new data between March 20 and 24, but three new reports did stand out: Durable Goods, New Single-Family Home Sales, and Existing Home Sales.
- Durable goods orders increased 1.7%.
Orders for durable goods (items expected to last) beat expectations in February and are up 5% since this time last year.[6] While commercial aircraft orders accounted for a significant portion of the increase, data throughout the report may indicate that business investment and confidence is on the rise.[7]
- New single-family home sales increased 6.1%.
In February, sales of new single-family homes hit their second-fastest growth since 2008.[8] Even as home prices and mortgage rates rise, demand for new homes has grown by 12.8% in the past 12 months.[9]
- Existing home sales dropped 3.7%.
Coming off of January, where we saw the fastest pace of existing home sales since 2007, the report missed expectations in February.[10] Low inventory of available houses is pushing prices higher and may be keeping some potential buyers from moving forward.[11] In the past year, median prices have risen 7.7%; meanwhile, sales are 5.4% higher.[12]
This week, we will receive the Q4 GDP final reading, as well as insight into personal income, consumer sentiment, and consumer confidence. This and other forthcoming data provides the foundation necessary for clearly understanding the economic environment.
We understand how compelling the news and political conversations can be, and there is no denying that policies can affect the economy. However, we are here to help you gain the perspectives you need to know where you stand in your unique financial life—rather than what the headlines may urge you to believe.
ECONOMIC CALENDAR
Tuesday: Consumer Confidence, International Trade in Goods
Wednesday: Pending Home Sales Index
Thursday: GDP
Friday: Personal Income and Outlays, Consumer Sentiment
| Data as of 3/24/2017 | 1-Week | Since 1/1/17 | 1-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 | -1.44% | 4.70% | 15.13% | 13.55% | 6.32% |
| DOW | -1.52% | 4.22% | 17.59% | 11.49% | 6.50% |
| NASDAQ | -1.22% | 8.28% | 22.11% | 18.00% | 13.80% |
| International | -0.07% | 6.75% | 11.01% | 2.92% | -1.83% |
| Data as of 3/24/2017 | 1 mo. | 6 mo. | 1 yr. | 5 yr. | 10 yr. |
| Treasury Yields (CMT) | 0.73% | 0.89% | 1.00% | 1.93% | 2.40% |
Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized. Sources: Yahoo! Finance, S&P Dow Jones Indices and Treasury.gov. 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.
Tax Benefits of Higher Education
Pursuing higher education can provide you with tax benefits that help offset the money you owe if either you, your spouse, or your dependents attended in 2016. You have two credits available: 1) American Opportunity Credit and 2) Lifetime Learning Credit. Here are tips for knowing if these credits apply to you and how to claim them.
American Opportunity Credit
- For: Students who actively pursued a degree or another recognized college credential at least part time and for a minimum of one academic period in 2016
- Worth: Benefit maximum is $2500 per student
- Time Limit: Only applicable during first four years of attendance at an eligible college or vocational school
Lifetime Learning Credit
- For: Students who pursued any postsecondary education, including courses taken to acquire or improve job skills
- Worth: Benefit maximum is $2000 per tax return, no matter how many students in your household can claim this credit
- Time Limit: No limit on the number of years you can claim this credit
Other qualifying factors may apply, and you can learn more on the IRS website. When filing taxes, claim your credits using Form 8863.
*This information is not intended to be a substitute for specific individualized tax advice.
We suggest that you discuss your specific tax issues with a qualified tax advisor
Tip courtesy of IRS.gov[14]
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.
Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.
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.
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[1]http://finance.yahoo.com/quote/^GSPC/history?period1=1489723200&period2=1490328000&interval=1d&filter=history&frequency=1d
http://finance.yahoo.com/quote/^DJI/history?period1=1489723200&period2=1490328000&interval=1d&filter=history&frequency=1d
http://finance.yahoo.com/quote/^IXIC/history?period1=1489723200&period2=1490328000&interval=1d&filter=history&frequency=1d
https://www.msci.com/end-of-day-data-search
[2] http://www.cnbc.com/2017/03/24/us-markets.html
[3] https://www.bloomberg.com/news/articles/2017-03-23/asia-stocks-signal-caution-on-health-vote-delay-markets-wrap
[4] https://www.bloomberg.com/news/articles/2017-03-23/asia-stocks-signal-caution-on-health-vote-delay-markets-wrap
[5] http://www.cnbc.com/2017/03/24/us-markets.html
[6] http://www.ftportfolios.com/Commentary/EconomicResearch/2017/3/24/new-orders-for-durable-goods-rose-1.7percent-in-february
[7] http://www.ftportfolios.com/Commentary/EconomicResearch/2017/3/24/new-orders-for-durable-goods-rose-1.7percent-in-february
[8] http://www.ftportfolios.com/Commentary/EconomicResearch/2017/3/23/new-single-family-home-sales-increased-6.1percent-in-february
[9] http://www.reuters.com/article/us-usa-economy-idUSKBN16U1M4
[10] http://www.ftportfolios.com/Commentary/EconomicResearch/2017/3/22/existing-home-sales-declined-3.7percent-in-february
[11] http://www.cnbc.com/2017/03/22/us-existing-home-sales-fall-from-10-year-high.html
[12] http://www.ftportfolios.com/Commentary/EconomicResearch/2017/3/22/existing-home-sales-declined-3.7percent-in-february
[13] http://www.foodandwine.com/recipes/toasted-spaghetti-clams
[14] https://www.irs.gov/uac/check-out-tax-benefits-for-higher-education
17 http://health.usnews.com/health-news/blogs/eat-run/2014/09/17/how-to-buy-sustainable-and-healthy-fish
