The markets marched ahead last week with the S&P 500 and the NASDAQ reporting all-time records, albeit just slightly above previous highs.[i] The S&P rose 1.43% over last week, while the NASDAQ was up 2.08%.[ii] The Dow gained 1.32% and the MSCI EAFE gained 0.14% for the week.[iii] Volatility subsided as the CBOE Volatility Index, which gauges fear in the market, fell to 9.8 at the end of the week.[iv]
A few important economic developments also caught our attention.
Market News for the Week
- Strong Corporate Earnings
Corporate earnings remain a bright spot as approximately 75% of S&P 500 companies beat their Q1 earnings estimates. S&P 500 corporate earnings are averaging a 13.9% increase—the best performance in over 5 years.[v]
- First Quarter GDP Revised Upward
The good news is that Q1 GDP revised upward from 0.7% to 1.2% growth.[vi] However, the economy continues to grow at a less-than-robust rate at approximately 2% on a year-over-year basis, as it has since 2011.[vii]
- Oil Prices Fall
U.S. crude ended the week at $49.80 after prices fell almost 5% on Thursday following OPEC’s announced 9-month extension to limit oil production.[viii] Investors remain cautious; U.S. oil production has spiked by over 10% in the last year, keeping oil prices down by offsetting reduced OPEC production.[ix]
- Softening Housing Sales
New home sales fell 11.4% in April to an annualized rate of 569,000. Median new home prices dropped 3.0% to $309,200, as sales are tracking for only a modest 0.5% gain for the year.[x] April’s existing home sales dropped 2.3% in another indication of softening home sales.[xi]
- The Fed’s Plan to Tighten Its Balance Sheet
As expected, the Federal Reserve FOMC unveiled a proposal to gradually unwind its $4.5 trillion balance sheet with monthly limits. The process is likely to begin later in the year, though the Fed has not announced a specific date.[xii]
Heading Into Summer
After Memorial Day, the shortened workweek brings more attention-worthy reports as investors will continue to evaluate the prospects for a stronger Q2 GDP performance. Tuesday’s April consumer spending reports and Friday’s trade data should give us a better picture of where Q2 GDP is heading.[xiii]
Investors will continue to monitor the U.S. trade gap. April exports were down 0.9% while imports were up 0.7%, creating an unfavorable gap of $67.6 billion. Investment in new equipment will also provide investors with another important indicator of future economic growth. New equipment orders have so far remained flat for the year, though. Finally, the Fed’s plans for a possible interest rate hike in June will be on investors’ radar.[xiv]
If you have questions about where you stand today or how to prepare for tomorrow, we are here to talk. Our goal is to give you the facts and insight you need to remain informed and in control of your financial future.
Tuesday: Consumer Confidence
Wednesday: Motor Vehicle Sales, Pending Home Sales
Thursday: ADP Employment Report, Construction Spending, PMI Manufacturing Index
Friday: Employment Situation
|DATA AS OF 5/26/2017||1 WEEK||SINCE 1/1/17||1 YEAR||5 YEAR||10 YEAR|
|STANDARD & POOR’S 500||1.43%||7.91%||15.58%||12.89%||4.77%|
|DATA AS OF 5/26/2017||1 MONTH||6 MONTH||1 YEAR||5 YEAR||10 YEAR|
|TREASURY YIELDS (CMT)||0.75%||1.08%||1.17%||1.79%||2.25%|
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.
Recipe of the Week: Spiced Pear and Berry Crumble
A buttery, spicy treat!
1 cup all-purpose flour
2/3 cup old-fashioned oats
1/2 cup light brown sugar
1/2 cup walnuts, chopped
1/4 teaspoon salt, plus one pinch
6 tablespoons cold butter, divided, plus 4 tablespoons
1/2 teaspoon ground cinnamon
1/4 teaspoon ground allspice
2 pounds ripe, peeled pears, cored and chopped
1/2 cup granulated sugar
2 cups frozen mixed berries (such as blueberries, raspberries, and blackberries)
3 tablespoons cornstarch
1/4 cup amaretto or almond liqueur
- Preheat oven to 375°
- Combine flour, oats, brown sugar, walnuts, and 1/4 teaspoon salt in medium bowl.
- Rub 6 tablespoons butter into mixture with fingers.
- Squeeze crumb mixture to form large clumps, and place in the freezer.
- Heat remaining 4 tablespoons butter on medium in an oven-safe, 10-inch skillet for 6 minutes or until butter browns and becomes fragrant, swirling often.
- Add cinnamon and allspice to butter.
- Cook for 1 minute, stirring frequently.
- Add pears, granulated sugar, and pinch of salt, and stir for 5 minutes.
- Remove from heat, and mix in berries, cornstarch, and amaretto.
- Take crumb from freezer and sprinkle over the pear-berry mixture until fully covered.
- Bake for 25 minutes or until topping browns and pears are tender.
- Can serve warm or at room temperature.
Recipe adapted from Good Housekeeping[i]
Tax Tips: Know Who Can Represent You Before the IRS
The tax preparer you choose to help you file taxes can have different representation or “practice” rights. These rights affect how they can represent you before the IRS. As you manage your tax details within your financial life, remember these tips.
Two Types of Representation Rights:
- Unlimited: This category enables your tax preparer to represent you before the IRS on any tax item. The credentialed tax professional can be an Enrolled Agent, Certified Public Account (CPA), or attorney.
- Limited: This category means that only the person who prepared and signed your tax return can represent you before the IRS. However, he or she cannot represent you on appeals or collection matters. Your tax preparer can represent you in front of revenue agents, customer service representatives, and similar IRS employees.
As you manage your taxes each year, be sure to familiarize yourself with the tax preparer’s representation rights.
Other details apply, and you can find more information on the IRS website.
Please Note: 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[ii]
Health Tips: Understand High Blood Pressure
The symptoms of high blood pressure are difficult to detect. Casually known as the “silent killer,” many people with the condition are unaware that anything is wrong with their health. By familiarizing yourself with some potential traits of high blood pressure, you’ll better prepare yourself to proactively care for your health.
Eyes develop blood spots
When your blood pressure goes untreated, you may damage your optic nerve. This isn’t a direct result from high blood pressure; however, developing blood spots in your eyes (called subconjunctival hemorrhage) is more common in people with elevated blood pressure levels.
Our faces can redden (when blood vessels dilate) from a variety of triggers, such as exercise and emotional stress. People with high blood pressure may experience higher levels of facial flushing.
Sudden dizziness occurs
Some people with high blood pressure may experience dizziness as a side effect from their condition. However, similar to other symptoms, elevated blood pressure levels are not the direct cause of dizziness. Instead, sudden dizziness can be a warning sign of stroke—and a leading cause of strokes is high blood pressure.
Tip courtesy of American Heart Association[iii]