Once again, domestic markets reached record highs last week. The S&P 500 was up by 0.69% and the NASDAQ increased by 0.12%.[1] With its 0.96% week-over-week growth, the Dow has posted gains for 11 straight days and is currently experiencing its longest record streak since 1987.[2] On the other hand, international equities in the MSCI EAFE lost ground, dropping by 0.25% for the week.[3]
Last week did not offer much new information on economic fundamentals. With the exception of January increases for new single-family homes and the fastest pace of existing home sales since 2007, we do not have a tremendous amount of new data to share.[4]
In the absence of this data, focusing on the roiling political conversations becomes much easier. As we have said before, we encourage you to pay attention to how the economy is performing—not what the headlines are blaring. Rather than recount the policy debates and political back-and-forth, we will discuss three important economic developments on our horizon: revised GDP, February CPI, and Fed interest rate deliberations.
What’s Ahead?
February 28: Revised Q4 2016 GDP
On Tuesday, we will receive the second growth estimate of the U.S. economy during the fourth quarter of 2016, which came in at 1.9% in the first estimate.[5] Consensus is that the revised estimate will increase to 2.1%, but we will have to wait until March 30 to see the third and final measurement of Q4 economic growth.[6]
The Bottom Line: GDP is key in measuring the U.S. economy’s strength. Any upward revisions would signal our economy is growing faster than the initial readings indicated.
March 15: February Consumer Price Index (CPI)
In January, the CPI experienced its largest month-over-month jump since 2013.[7] The upcoming February report will help to show whether prices are continuing to increase and how the cost of living is changing.
The Bottom Line: The CPI measures changes to the average cost of specific goods and services that consumers purchase and is a key indicator for inflation.[8] This data affects the bond and equity markets, labor contracts, Social Security payments, tax brackets, and more.[9]
March 15: Federal Open Market Committee (FOMC) Meeting Announcement
From March 14 – 15, the FOMC will meet and determine whether or not to raise the Federal Reserve’s benchmark interest rates.[10] After the meeting concludes, Fed Chair Janet Yellen will announce their decision—a move that market participants will watch very closely. Yellen recently commented that “Waiting too long to [raise rates] would be unwise.”[11] However, Wall Street does not expect an increase in March and shows a less than 1 in 5 chance of this move.[12]
The Bottom Line: When the Fed changes its benchmark interest rate, the effects reverberate throughout our economy. According to Barron’s, the FOMC interest-rate policy meetings “are the single most influential event for the markets.”[13] If the Fed decides to raise rates, this choice would affect interest rates now and also imply that monetary policy will continue to tighten throughout 2017.[14]
These upcoming details are only a few of the noteworthy economic details on the horizon. If you have questions about what other fundamental data we are tracking or believe could affect your financial life, we are always here to talk.
ECONOMIC CALENDAR
Monday: Durable Goods Orders, Pending Home Sales Index
Tuesday: GDP, Consumer Confidence
Wednesday: Motor Vehicle Sales, PMI Manufacturing Index, ISM Mfg Index,
Friday: PMI Services Index, ISM Non-Mfg Index
| Data as of 2/24/2017 | 1-Week | Since 1/1/17 | 1-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 | 0.69% | 5.74% | 22.67% | 14.67% | 6.31% |
| DOW | 0.96% | 5.36% | 26.31% | 12.08% | 6.46% |
| NASDAQ | 0.12% | 8.59% | 28.68% | 19.45% | 13.24% |
| US Corporate Bond Index | 0.75% | 1.40% | 5.48% | 3.67% | 5.16% |
| International | -0.25% | 3.95% | 14.22% | 2.15% | -2.14% |
| Data as of 2/24/2017 | 1 mo. | 6 mo. | 1 yr. | 5 yr. | 10 yr. |
| Treasury Yields (CMT) | 0.40% | 0.65% | 0.80% | 1.80% | 2.31% |
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. Corporate bond performance is represented by the SPUSCIG. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.
Know These Helpful Facts About Capital Gains and Losses
The IRS requires taxpayers to claim gains and losses they have on any capital assets they own when filing their personal taxes. How much you pay in taxes and whether or not you can deduct items depends on your unique financial details. Here are some details to keep in mind as you file your taxes this year.
What are capital assets?
You hold capital assets when you buy both physical and investment properties. Physical property includes items like a home or car. Investment property includes assets such as stocks and bonds.
What are gains and losses?
Whenever you sell a capital asset that you own, you will have either a gain (profit) or loss (deficit). You calculate your gain or loss by determining the difference between the basis (typically what you paid for the capital asset) and what you received after the sale.
Details to Consider
Net Investment Income Tax:
When filing your taxes, your income must include all capital gains. Depending on how much income you made, you may have to pay the 3.8% Net Investment Income Tax on your capital gains.
Deductible Losses:
Taxpayers are able to deduct any financial losses on their investment properties. However, any physical properties you own for personal use do not count toward your deductible losses.
Carryover Losses:
You may be able to carry over your total net capital losses if this amount is more than the amount you’re allowed to deduct.
Tip courtesy of IRS.gov[15]
Share the Wealth of Knowledge!
Please share this market update with family, friends or colleagues. If you would like us to add them to our list, please let us know. We love being introduced!
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 U.S. Investment Grade Corporate Bond Index contains U.S.- and foreign-issued investment-grade corporate bonds denominated in U.S. dollars.
The SPUSCIG launched on April 09, 2013. All information for an index prior to its Launch Date is back-tested, based on the methodology that was in effect on the Launch Date. Back-tested performance, which is hypothetical and not actual performance, is subject to inherent limitations because it reflects application of an Index methodology and selection of index constituents in hindsight. No theoretical approach can take into account all of the factors in the markets in general and the impact of decisions that might have been made during the actual operation of an index. Actual returns may differ from, and be lower than, back-tested returns.
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=1487307600&period2=1487912400&interval=1d&filter=history&frequency=1d
http://finance.yahoo.com/quote/^IXIC/history?period1=1487307600&period2=1487912400&interval=1d&filter=history&frequency=1d
[2] https://www.bloomberg.com/news/articles/2017-02-23/asian-stocks-signal-cautious-start-as-yen-gains-markets-wrap
http://finance.yahoo.com/quote/%5EDJI/history?period1=1487307600&period2=1487912400&interval=1d&filter=history&frequency=1d
[2] https://www.bloomberg.com/news/articles/2017-02-23/asian-stocks-signal-cautious-start-as-yen-gains-markets-wrap
[3] https://www.msci.com/end-of-day-data-search
[4] http://www.ftportfolios.com/Commentary/EconomicResearch/2017/2/22/existing-home-sales-increased-3.3percent-in-january
[5] http://wsj-us.econoday.com/byshoweventfull.asp?fid=477648&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp – top
[6] http://wsj-us.econoday.com/byshoweventfull.asp?fid=477648&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp – top
[7] http://www.ftportfolios.com/Commentary/EconomicResearch/2017/2/15/the-consumer-price-index-increased-0.6percent-in-january
[8] http://wsj-us.econoday.com/byshoweventfull.asp?fid=477392&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp – top
[9] http://wsj-us.econoday.com/byshoweventfull.asp?fid=477392&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp – top
[10] http://wsj-us.econoday.com/byweek.asp?day=13&month=3&year=2017&cust=wsj-us&lid=0
[11] http://www.cnbc.com/2017/02/14/fed-chair-janet-yellen-unwise-to-wait-too-long-to-hike-interest-rates.html
[12] http://www.cnbc.com/2017/02/21/the-fed-and-the-market-are-having-a-hard-time-getting-on-the-same-page.html
[13] http://wsj-us.econoday.com/byshoweventfull.asp?fid=475712&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp – top
[14] http://www.cnbc.com/2017/02/21/the-fed-and-the-market-are-having-a-hard-time-getting-on-the-same-page.html
[15] https://www.irs.gov/uac/capital-gains-and-losses-10-helpful-facts-to-know-2
