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New Year Starts With Record Highs

The first trading week of 2017 is over, and during this time, all three major domestic indexes hit record highs. The DOW reached 19,999.63 in intra-day trading on Friday, January 6 – just 0.37 away from achieving 20,000 for the first time. [1] On the same day, the S&P 500 and NASDAQ both closed at record highs. For the week, the S&P 500 was up 1.70%, the Dow gained 1.02%, and the NASDAQ added 2.56%. [2] International stocks in the MSCI EAFE increased by 1.77%. [3]

To say that 2017 has started differently than 2016 would be an understatement. This time last year, we ended the week with all three indexes dropping at least 5.96% on fears about China’s economy. [4]

 

What else happened last week?

In addition to record highs in the markets, we received a number of economic reports, which provided a mix of positive and less-than-ideal data.

Jobs Grew But Missed Projection: The Bureau of Labor Statistics reported that U.S. employers added an estimated 156,000 non-farm jobs in December. This number missed economists’ projections of 178,000 new jobs but also marked the 75th straight month of job growth. [5]

Unemployment Increased: The percentage of individuals actively seeking jobs in the U.S. increased by 0.1% in December, meeting expectations that it would reach 4.7%. [6]

Wages Grew: One bright spot in this week’s labor report was a 0.4% increase in average hourly earnings. After sluggish growth through much of the economic recovery, wages increased by 2.9% in 2016. [7]

Trade Deficit Increased: In November, U.S. exports declined as our imports grew, pushing the trade deficit to a nine-month high. The inflation-adjusted trade deficit is now $3.2 billion bigger than a year ago, an increase that could deflate Gross Domestic Product for the fourth quarter of 2016. [8]

Manufacturing Hit Two-Year High: For the fourth consecutive month, the ISM manufacturing index showed growth in the manufacturing industry. December’s reading of 54.7 beat expectations. [9]

Services Sector Beat Expectations: The ISM non-manufacturing index, which surveys economic data from executives in 60 service sectors, grew for the 83rd straight month. December’s measure of 57.2 matched November’s reading and beat economists’ predictions of a drop to 56.6. [10]

Overall, beginning a new year with record highs in the markets feels much better than the rocky start we experienced in 2016. Many of the fundamentals seem to point to an economy that is picking up speed, but only time will tell how our new presidential administration’s policies will affect us in the future.

We hope to see continued growth and stability, and no matter what lies ahead, we will be here to guide you toward the goals and priorities that matter most to you.

 

ECONOMIC CALENDAR:
Monday: Labor Market Conditions Index, Consumer Credit
Tuesday: JOLTS
Thursday: Import and Export Prices
Friday: PPI-FD, Retail Sales, Consumer Sentiment

 

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.

 

 

 

 

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1 http://money.cnn.com/2017/01/06/investing/dow-nears-20000-jobs-report-trump-rally/
2 http://finance.yahoo.com/quote/%5EGSPC/history?period1=1483074000&period2=1483678800&interval=1d&filter=history&frequency=1d
http://finance.yahoo.com/quote/%5EDJI/history?period1=1483074000&period2=1483678800&interval=1d&filter=history&frequency=1d
http://finance.yahoo.com/quote/%5EIXIC/history?period1=1483074000&period2=1483678800&interval=1d&filter=history&frequency=1d
3 https://www.msci.com/end-of-day-data-search
4 http://finance.yahoo.com/q/hp?s=%5EGSPC&a=11&b=28&c=2015&d=11&e=31&f=2015&g=d
http://finance.yahoo.com/q/hp?s=%5EDJI&a=11&b=28&c=2015&d=11&e=31&f=2015&g=d
http://finance.yahoo.com/q/hp?s=%5EIXIC&a=11&b=28&c=2015&d=11&e=31&f=2015&g=d
5 http://www.forbes.com/sites/maggiemcgrath/2017/01/06/in-last-jobs-report-of-obamas-presidency-u-s-adds-156000-jobs-in-december/#2006f2ef4423
6 http://www.rpc.senate.gov/policy-papers/december-2016-jobs-report
http://www.forbes.com/sites/maggiemcgrath/2017/01/06/in-last-jobs-report-of-obamas-presidency-u-s-adds-156000-jobs-in-december/#34537c094423
7 http://www.theage.com.au/business/markets/american-workers-average-hourly-earnings-rise-29pc-in-2016-20170106-gtnf8u.html
8 http://www.ftportfolios.com/Commentary/EconomicResearch/2017/1/6/the-trade-deficit-in-goods-and-services-came-in-at-45.2-billion-in-november
9 http://www.ftportfolios.com/Commentary/EconomicResearch/2017/1/3/the-ism-manufacturing-index-rose-to-54.7-in-december
10 http://www.cnbc.com/2017/01/05/ism-non-manufacturing-index-hits-572-vs-estimate-of-566.html