After several weekly losses, the major domestic indexes all ended in positive territory on Friday, August 25. The S&P 500 gained 0.72%, the Dow was up 0.64%, and the NASDAQ added 0.79% for the week.[1] International stocks in the MSCI EAFE also increased by 0.58%.[2]
Last week provided a number of economic updates, and a report from Fed Chair Janet Yellen helped push the markets higher. [3] Rather than providing a rundown of every report, we want to focus on two in particular that give key information on economic health—and a reminder to look beyond the headlines.
Beyond the Headlines in Housing and Manufacturing
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Housing Drops
The headlines: Sales of both new and existing homes fell in July.[4]
The deeper story: Relatively few existing houses are available for purchase. In addition, builders are focusing on more lavish new homes rather than the modest ones that many buyers seek. As a result, the median price of a new home hit its highest July level ever, climbing to $313,700—6% higher than this time last year.[5] Existing home prices are also 6.2% above where they were in July 2016.[6]
The takeaway: High prices may be excluding first-time homebuyers from the market—especially for new houses.[7]
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Manufacturing Declines
The headlines: Durable goods orders plunged by 6.8%.[8]
The deeper story: The headline’s stated monthly decline is largely due to a sharp drop-off in orders for transportation equipment, in particular for civilian aircraft. However, if you dig deeper, you will see that July’s civilian aircraft decrease follows a massive 129.3% increase in June, calming any concerns about the aircraft industry.[9] Overall, orders for core goods beat expectations and could help drive a higher reading for second quarter GDP.[10]
The takeaway: Orders and shipments for many key goods increased in July, which points to positive sentiment among businesses—and good news for the economy.[11]
On the Horizon
This week, we will receive the second reading of second-quarter GDP, as well as both Consumer Confidence and Consumer Sentiment updates. Furthermore, according to President Trump’s Chief Economic Advisor, an announcement on tax reforms will occur on August 30.[12] Together, these reports could affect market behavior and indicate both where the economy has been and what may be on the horizon.
As always, while we pay attention to today’s headlines and updates, our focus remains solidly on how to move you toward the future you desire. Should you have any questions, we are here to help.
ECONOMIC CALENDAR
Tuesday: Consumer Confidence
Wednesday: GDP, ADP Employment Report
Thursday: Personal Income and Outlays
Friday: Motor Vehicle Sales, PMI Manufacturing Index, ISM Mfg Index, Consumer Sentiment
| DATA AS OF 8/25/2017 | 1 WEEK | SINCE 1/1/17 | 1 YEAR | 5 YEAR | 10 YEAR |
| STANDARD & POOR’S 500 | 0.72% | 9.12% | 12.45% | 11.60% | 5.14% |
| DOW | 0.64% | 10.38% | 18.24% | 10.64% | 5.01% |
| NASDAQ | 0.79% | 16.39% | 20.21% | 15.34% | 9.29% |
| INTERNATIONAL | 0.58% | 14.48% | 13.26% | 5.36% | -1.11% |
| DATA AS OF 8/25/2017 | 1 MONTH | 6 MONTHS | 1 YEAR | 5 YEAR | 10 YEAR |
| TREASURY YIELDS (CMT) | 0.99% | 1.11% | 1.23% | 1.77% | 2.17% |
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.
File Form 1040X to Amend a Tax Return
Mistakes happen—they even happen on tax returns. You can correct information by filing an amended tax return. This includes making changes to filing status and dependents or correcting income credits or deductions. Do not worry about filing an amended return to correct mistakes in math; the IRS will correct those.
Here are some tips the IRS offers on how to amend a tax return:
- File using paper form. Use Form 1040X, Amended U.S. Individual Income Tax Return, to correct errors on an original tax return the taxpayer has already filed.
- Use separate forms for each tax year. Taxpayers amending tax returns for more than one year will need a separate 1040X for each tax year.
- Wait to file your corrected refund for tax year 2016. Taxpayers should wait for the refund from their original tax return before filing an amended return.
- Pay additional tax. Taxpayers filing an amended return because they owe more tax should file Form 1040X and pay the tax as soon as possible. This will limit interest and penalty charges.
- Track your amended return. Taxpayers can track the status of an amended return three weeks after filing.
Get all the tips on filing an amended return on the IRS website.
* This information is not intended to be a substitute for specific individualized tax advice. We suggest you discuss your specific tax issues with a qualified tax advisor.
Tip courtesy of IRS.gov[13]
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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 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.
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Consult your financial professional before making any investment decision.
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[1] http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX®ion=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=!DJI®ion=usa&culture=en-US
http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO
[2] https://www.msci.com/end-of-day-data-search
[3] https://www.cnbc.com/2017/08/25/us-stocks-central-bank-jackson-tax-reform.html
https://www.cnbc.com/2017/08/25/ecbs-mario-draghi-says-global-recovery-is-firming-up-euro-climbs.html
[4] https://www.cnbc.com/2017/08/23/heres-why-new-home-sales-tanked.html?recirc=taboolainternal
https://www.cnbc.com/2017/08/24/july-us-existing-home-sales.html
[5] https://www.cnbc.com/2017/08/23/heres-why-new-home-sales-tanked.html?recirc=taboolainternal
[6] https://www.cnbc.com/2017/08/24/july-us-existing-home-sales.html
[7] https://www.cnbc.com/2017/08/23/heres-why-new-home-sales-tanked.html?recirc=taboolainternal
[8] http://wsj-us.econoday.com/byshoweventfull.asp?fid=477410&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
[9] http://www.reuters.com/article/us-usa-economy-durablegoods-idUSKCN1B51HJ?il=0
[10] http://wsj-us.econoday.com/byshoweventfull.asp?fid=477410&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
[11] http://www.reuters.com/article/us-usa-economy-durablegoods-idUSKCN1B51HJ?il=0
[12] https://www.cnbc.com/2017/08/25/us-stocks-central-bank-jackson-tax-reform.html
[13] https://www.irs.gov/uac/newsroom/file-form-1040x-to-amend-a-tax-return
