Markets tuned out noise from Washington last week and continued to focus on economic fundamentals. Mildly rebounding retail sales and strong consumer sentiment seem to point toward a modestly stronger second quarter.
After a three-week winning streak, both the Dow and S&P 500 reported slight losses. The Dow closed with a 0.53% loss, and the S&P 500 reported a 0.35% decline for the week. The NASDAQ, however, rose 0.34% while the MSCI EAFE reported a modest 0.16% gain.
MIXED SIGNALS CONTINUE
• Soft retail earnings
Consumer retail purchases were up after a first-quarter decline. Sales rose by 0.4% (just shy of the 0.6% consensus), and 9 of the 13 retail categories posted gains. As expected, early second-quarter gains suggest the first-quarter decline was just a blip.
• Continuing concerns over store closings
A report last month concluded that in excess of 8,600 brick-and-mortar stores could close in 2017 due to poor sales. Last year, at least 2,000 stores shut their doors, while just over 5,000 closed in 2015. The record for store closings occurred in 2008 when over 6,000 stores closed.
• Strong consumer sentiment
Despite modest retail sales, consumer confidence reached a 4-month high. Consumer expectations are positive regarding job growth, income, and low inflation. Furthermore, 44% of surveyed consumers expressed optimism in their financial prospects—the highest percentage since 2004.
• U.S. consumer prices rise in line with expectations
The consumer price index rose 0.2% in April, in line with expectations for the month. However, the medical care and communications sectors saw continuing price weakness.
LOOKING AHEAD
This week, we will look forward to data regarding the strength of the housing market. Though the highest percent of consumers in over 10 years report positive opinions on selling homes, next week’s numbers will give us a better idea of where the markets stand. Finally, the market will continue to watch oil prices, which steadied this week after three weeks of decline.
In the weeks ahead, possible corporate tax rate reductions and potential trade policy changes will remain in focus for markets. In addition, markets will remain interested in the Fed’s interest rate plans and its plan to reduce its $4.5 trillion balance sheet.
As always, we will continue to track the impact of international and domestic political news on the markets and the economy.
ECONOMIC CALENDAR
Monday: Housing Market Index
Tuesday: Housing Starts, Industrial Production
Wednesday: EIA Petroleum Status Report
Friday: Philadelphia Fed Business Outlook Survey
| DATA AS OF 5/12/2017 | 1 WEEK | SINCE 1/1/17 | 1 YEAR | 5 YEAR | 10 YEAR |
| STANDARD & POOR’S 500 | -0.35% | 6.79% | 15.83% | 12.05% | 4.73% |
| DOW | -0.53% | 5.74% | 17.92% | 10.26% | 4.60% |
| NASDAQ | 0.34% | 13.71% | 29.21% | 15.85% | 9.10% |
| INTERNATIONAL | 0.16% | 10.92% | 13.52% | 5.28% | -1.80% |
| DATA AS OF 5/12/2017 | 1 MONTH | 6 MONTHS | 1 YEAR | 5 YEAR | 10 YEAR |
| TREASURY YIELDS (CMT) | 0.69% | 1.03% | 1.11% | 1.85% | 2.33% |
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.
Tips for Safeguarding Your Passwords*
As we do more of our daily activities online, including filing taxes, we become more vulnerable to security compromises, such as breached data and identify theft. A key item that can put you at risk is the vulnerability of your passwords. Here are tips for taking better steps to safeguard your passwords to protect your important data.
1. Create long passwords
Breaking into a long password is more difficult to do than one with just a few characters and numbers. As such, you should create passwords that have a minimum of 8 characters.
2. Use combinations of characters and capitalization
Characters
Sometimes companies will control what types of characters you can use. When you have the freedom to choose a variety of characters, you can create a secure password using a combination of the following:
• letters
• numbers
• symbols
Capitalization
You also should vary using capitalized and lowercase letters. Be sure to include at minimum one uppercase and one lowercase letter.
3. Avoid personal information
While details such as your children’s or pets’ names can be memorable, they make guessing your password easy for criminals. Avoid using any personally identifying information in your chosen password.
Other details apply, and you can find more information 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
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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.
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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.
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