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%.[i]
On Tuesday, March 21, the S&P 500 and Dow recorded 1% declines for the first time since Oct. 11, 2016.[ii] By Friday, the S&P had posted its worst week since the election.[iii] At the same time, 10-year Treasury yields fell and the dollar dropped for the second straight week.[iv]
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.[v] 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.[vi] 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.[vii]
- New single-family home sales increased 6.1%.
In February, sales of new single-family homes hit their second-fastest growth since 2008.[viii] Even as home prices and mortgage rates rise, demand for new homes has grown by 12.8% in the past 12 months.[ix]
- 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.[x] Low inventory of available houses is pushing prices higher and may be keeping some potential buyers from moving forward.[xi] In the past year, median prices have risen 7.7%; meanwhile, sales are 5.4% higher.[xii]
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.
Tuesday: Consumer Confidence, International Trade in Goods
Wednesday: Pending Home Sales Index
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%|
|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.
Toasted Spaghetti With Clams
Enjoy the toasted flavor of this simple pasta dish!
- 3 tablespoons extra virgin olive oil
- ¾ pounds of spaghetti, broken into 2-inch pieces
- 2 garlic cloves, minced
- crushed red pepper
- 3 cups bottled clam broth
- 1 cup water
- 3 dozen littleneck clams, rinsed
- ¼ cup flat-leaf parsley, minced
- Heat olive oil until it shimmers in a large skillet over medium heat.
- Add the raw spaghetti pieces and sauté, stirring constantly until golden (about 3 minutes).
- Toss in minced garlic and a large pinch of the crushed red pepper. Cook until they become fragrant (about 1 minute).
- Add the water and clam broth, and bring the mixture to a boil.
- Cover the skillet with a lid, and cook until the noodles are just al dente (around 8 minutes).
- Add the clams to the skillet, nestling them so they are snug within the pasta.
- Cover the skillet again and cook until the pasta is al dente and clams open (about 7 minutes)
Finishing Touches – Before Serving:
- Liven up the pasta with a few tablespoons of water if it’s slightly dry from cooking.
- Top pasta dish with minced parsley and enjoy.
Recipe adapted from Food and Wine[i]
Tax Benefits of Higher Education
Pursuing higher education can provide you with tax benefits that help offset the money you owe if 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
*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[i]