As the holiday season progresses, the markets continue to impress. Last week, many energy, financial, and industrial sector stocks helped drive performance.[1] Hitting record highs yet again, the S&P gained 0.35%, and the Dow jumped 0.40% for the week.[2] Meanwhile, the NASDAQ fell slightly by 0.11%, and the MSCI EAFE rose 0.08%.[3]
Solid labor market conditions and a rebounding retail climate are helping to support the economy as the year closes.[4] Here are some developments that stood out last week:
Promising Labor Market Numbers
Encouraging news came on Friday when we learned that nonfarm payroll jobs rose more than expected in November, coming in at 228,000.[5] Manufacturers have created almost 200,000 new jobs in the last 12 months and 1 million new factory jobs since 2010.[6] We have now had 86-straight months of job gains, the longest stretch in U.S. history.[7]
This growth in new jobs has helped to keep unemployment down, which remains at a 17-year low of 4.1%.[8] Additionally, average hourly wages have increased by 2.5% for the year.[9]
Retail Climate in Positive Territory
As the job market expands and people have more spending power, we’re experiencing a robust retail climate. Retail stocks are rebounding after a long market lag, and holiday shopping is strong this season with predicted growth from 3.6% to 4% over last year. Further, brick-and-mortar shops are even feeling the shopping strength, emerging as some of the best performing retail investments, despite their general drop in 2017.[10]
What Lies Ahead
Now that Congress has avoided a government shutdown—at least for a few weeks—the Senate and the House can focus on the tax bill.[11] While progress has been made, they still need to negotiate the financial bill’s terms.[12]
Next week, investors will follow the Fed to see if it raises interest rates, as expected. In addition, the Fed could also comment on inflation expectations and address concerns about potential asset bubbles.[13]
As the holidays wind up, we will continue to monitor the markets and focus on the fundamentals. If you have questions about how this news affects your financial life, we’re here to talk. Feel free to contact us and find the answers you need.
ECONOMIC CALENDAR
Monday: JOLTS
Wednesday: Consumer Price Index, FOMC Meeting Announcement
Thursday: Jobless Claims, Retail Sales, Business Inventories
Friday: Empire State Mfg Survey, Industrial Production
| DATA AS OF 12/8/2017 | 1 WEEK | SINCE 1/1/17 | 1 YEAR | 5 YEAR | 10 YEAR |
| STANDARD & POOR’S 500 | 0.35% | 18.43% | 18.04% | 13.33% | 5.83% |
| DOW | 0.40% | 23.11% | 24.03% | 13.09% | 5.97% |
| NASDAQ | -0.11% | 27.07% | 26.26% | 18.09% | 9.72% |
| INTERNATIONAL | 0.08% | 19.08% | 19.71% | 5.04% | -1.46% |
| DATA AS OF 12/8/2017 | 1 MONTH | 6 MONTHS | 1 YEAR | 5 YEAR | 10 YEAR |
| TREASURY YIELDS (CMT) | 1.14% | 1.45% | 1.65% | 2.14% | 2.38% |
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.
Beware W2 Scams
The IRS is warning people to be safe and cautious when opening emails asking for access to W-2 files. A rising email scam attempting to steal private information can put employees’ personal details at risk. Here are some common signs that scammers may include in their emails:
- Messages that appear to be from the company’s executive
- Subject lines with words like “review,” “manual review,” or “request”
- Simple greetings, such as, “Hey, you in today?”
- Requests for a list of all employees and their W2 forms
- Follow-up emails asking for a wire transfer
The scam is now so problematic that the IRS has created a special reporting portal for taxpayers who believe they’ve been affected.
Other details may 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 that you discuss your specific tax issues with a qualified tax advisor.
Tip adapted from IRS.gov [14]
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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.
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[1] http://wsj-us.econoday.com/byshoweventarticle.asp?fid=486628&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
https://www.cnbc.com/2017/12/05/questions-rising-about-limits-of-the-tax-trade.html
[2] https://www.cnbc.com/2017/12/08/us-stocks-jobs-report-brexit-tax-reform.html
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=%21DJI®ion=usa&culture=en-US
[3] http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO
https://www.msci.com/end-of-day-data-search
[4] http://wsj-us.econoday.com/byshoweventarticle.asp?fid=486628&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
[5] http://wsj-us.econoday.com/byshoweventfull.asp?fid=477426&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
http://wsj-us.econoday.com/byshoweventarticle.asp?fid=486628&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
[6] https://www.marketwatch.com/story/american-manufacturers-flex-their-muscles-sales-hiring-production-all-on-upswing-2017-12-08
[7] http://www.foxbusiness.com/markets/2017/12/08/us-economy-adds-more-jobs-in-november-than-expected.html
[8] http://wsj-us.econoday.com/byshoweventarticle.asp?fid=486628&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
[9] https://www.cnbc.com/2017/12/08/us-stocks-jobs-report-brexit-tax-reform.html
[10] https://www.morningstar.com/news/market-watch/TDJNMW_20171207667/update-tax-reform-and-holiday-shopping-send-retail-stocks-to-best-month-in-6-years.html
[11] http://www.businessinsider.com/government-shutdown-house-vote-trump-2017-12
[12] http://www.businessinsider.com/trump-gop-tax-reform-bill-poll-cbs-2017-12
[13] http://wsj-us.econoday.com/byshoweventarticle.asp?fid=486628&cust=wsj-us&year=2017&lid=0&prev=/byweek.asp#top
[14] https://www.irs.gov/newsroom/national-tax-security-awareness-week-thieves-use-w-2-scam-to-get-employee-data
