Last week, stocks rose but floated within a narrow trading range. By Friday, however, both the S&P 500 and the NASDAQ reached record highs.[i] For the week, the S&P 500 gained 0.63%, the Dow finished up 0.32%, and the NASDAQ rose 0.88%.[ii] The MSCI EAFE added 1.7%.[iii]
Overall, we experienced another week of generally positive, but somewhat mixed, economic signals. Soft auto sales and tumbling oil prices offset increased job creation and the lowest unemployment recorded in a decade.[iv]
POSITIVE MARKET NEWS
- Increased Job Creation and Low Unemployment
In April, U.S. payrolls added 211,000 jobs, exceeding the 190,000 predicted and showing a significant bounce back from March’s 79,000 increase. The jobless rate also dropped to 4.4%—the lowest it has been since May 2007.[v] The economy added jobs in several industries:[vi]
- Leisure and hospitality: +55,000 jobs
- Healthcare: +20,000 jobs
- Mining: +9,000 jobs
- Professional and business services: +39,000 jobs
- Government: +17,000 jobs
- Strong Corporate Earnings
First quarter earnings season continued last week, and U.S. companies once again reported strong results. So far, companies with majority overseas profits are reporting an average revenue growth of 19.9%, outperforming S&P 500 companies with domestic earnings only. This difference helps explain how corporations are reporting strong Q1 earnings despite sluggish economic growth in the U.S. during the same period.[vii]
- Decent Manufacturing and Service Reports
The ISM Manufacturing Index fell in April to 54.8 but remains in positive territory. The report is above 2016’s 51.5 average and suggests continued manufacturing growth. Meanwhile, the PMI Manufacturing Index reported a 0.5 loss in April at 52.8.[viii] However, the PMI Services Index rose from 52.8 in March to 53.1 in April.[ix] While the month-over-month declines may show a pause in manufacturing, numbers above 50 indicate growth.[x]
- Auto Sales Below Expectations
U.S. motor vehicle sales bounced up to an annualized rate of 16.9 million. Though April’s report falls below the predicted 17.2 million, it improves on March’s 16.6 million annualized rate.[xi]
- Oil Prices Tumble
Oil prices tumbled last week. Both June West Texas Intermediate (WTI) crude and July Brent crude finished the week down. WTI closed at $46.22 a barrel, falling approximately 6.3% below last week’s close. Brent crude fell by about 5.6% for the week to $49.10 a barrel.[xii]
On Wednesday, May 3, the Federal Open Market Committee (FOMC) announced it would keep the federal funds target range at 0.75% to 1.00%. Nonetheless, the Fed remains encouraged that the second-quarter GDP will rebound, because they believe consumer fundamentals remain solid.[xiii] This sentiment may indicate the FOMC will raise rates at their June meeting.[xiv]
On Sunday, Emmanuel Macron won the French presidential election, as expected. Macron’s win should ease European Market concerns, as he is a centrist who supports global trade, the euro, and France’s continuing membership in the EU.[xv]
As we look ahead to this week, our analysis will include a variety of international and domestic focuses. In particular, consumer prices, retail sales, and business inventories will highlight economic reports for the week while oil prices also should remain in focus for investors.
Tuesday: JOLTS (tracks monthly changes in job openings)
Thursday: Jobless Report, Producer Price Index
Friday: Consumer Price Index, Retail Sales, Business Inventories, Consumer Sentiment
|DATA AS OF 5/5/2017||1 WEEK||SINCE 1/1/17||1 YEAR||5 YEAR||10 YEAR|
|STANDARD & POOR’S 500||0.63%||7.17%||17.00%||11.87%||4.77%|
|DATA AS OF 5/5/2017||1 MONTH||6 MONTHS||1 YEAR||5 YEAR||10 YEAR|
|TREASURY YIELDS (CMT)||0.71%||1.01%||1.10%||1.89%||2.36%|
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.
Weekly Recipe: Chicken with Lemony Egg Noodles and Peas
A comforting, colorful meal!
- 8 oz extra-wide egg noodles
- 4 oz stringless sugar snap peas
- 1 cup carrots, shredded
- 1 cup peas (fresh or frozen)
- 1 cup chicken broth
- ½ cup heavy or whipping cream
- 1 tsp fresh lemon peel, grated
- ½ tsp black pepper, coarsely ground
- ½ tsp salt
- 2 cups skinless rotisserie chicken meat
- Fill a 4-quart saucepan with salted water.
- Heat water on high until boiling.
- Add noodles and cook according to the package directions.
- Add snap peas to noodles 1 minute before noodles finish cooking.
- Put shredded carrots and peas into a colander in the sink.
- Drain boiled noodles and snap peas into colander over the carrots and peas.
- Leave the noodle mixture to drain. Meanwhile, in the same saucepan, bring to boil the broth, cream, salt, pepper, and lemon peel.
- Stir noodle mixture and chicken into sauce.
- Warm mixture while constantly stirring until thoroughly warmed and combined.
Recipe adapted from Good Housekeeping
Tax Tips: Report Income Earned from a Hobby*.
Across the country, millions of people have passions they pursue on the side, earning money from their hobbies and interests. Even if you haven’t officially formed your hobby as a business, you still must claim the income you make through these efforts. Here are some tips to help you report your income
Identify whether you have a hobby or a business
- Hobby: You earn income but do not do so to make a profit, rather for your pastime recreation
- Business: You purposefully work to make a profit.
You can explore the 9 factors the IRS lists to help clarify if you have a hobby or business
Manage your hobby’s allowable expense deductions
When claiming hobby-earned income, you can typically deduct your expenses, but
only if they are ordinary and necessary.
- Ordinary expense: Considered common and acceptable for the hobby you engage in
- Necessary expense: Considered appropriate for participating in your hobby
Report expenses up to the allowable limit
You can report hobby expenses, but the limit is the amount of income you make from it. If your expenses exceed your income, then you have a loss. However, the IRS doesn’t allow you to deduct hobby-income losses.
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 you discuss your specific tax issues with a qualified tax advisor.
Tip courtesy of IRS.gov
Stay Healthy: Reduce Salt Intake by Avoiding These Foods
Sodium is a natural element we need from our food to maintain healthy body functions, such as transmitting nerve impulses and contracting and relaxing muscles. However, many people consume more salt than the recommended intake of 2,300 mg a day. Here are some tips for reducing sodium intake through how you eat.
- Reduce processed foods: Most American diets include high levels of sodium from processed foods. This comes from both the levels of salt added to the food, as well as the additives—which also contain sodium. You can manage your salt intake by limiting how often and how much you eat items such as pizza, cold cuts, and fast food.
- Swap salt for herbs and spices: Salt can help add flavor to meals. However, you can swap out salt for fresh herbs, dried spices, and citrus zest, all of which will liven up your dish without adding unnecessary sodium.
- Keep an eye on your per meal intake: Sodium can exist in the foods you eat even without you realizing it. Ingredients such as monosodium glutamate (MSG) and baking soda (sodium bicarbonate) also will add sodium to a dish. Be sure to read ingredients thoroughly and aim to avoid foods that have more than 200 mg per serving.
Tip courtesy of Mayo Clinic