May 1st, 2017
Here are several highlights from last week's market activity, as well as developing stories the investment team is following this week. As always, we remain committed to helping you navigate the ever changing investment environment.
The following highlights should not be viewed as a recommendation, nor is this a notification of an impending change in asset allocation. For more information, please contact your advisor with any questions.
- A strong move up for markets after digesting a diverse set of news from corporate earnings to central bank decisions and US tax reform plans. The DJIA finished the week at 20940.51, up +1.91% on the week. The S&P 500 closed at 2384.20, up +1.51% on the week. The NASDAQ finished up +2.32% on the week. U.S. 10-year Treasury ended the week yielding 2.28%. In the energy markets, crude oil settled at $49.33. Year-to-date the S&P 500 is up +6.49%.
- President Trump presented his proposals to cut the corporate tax rate to 15% from 35% and the top individual rate to 35%. Additionally, the administration called for eliminating state and local tax deductions, the estate tax and the alternative minimum tax, but increasing the standard individual deduction.
- In other news… U.S. economic growth slowed to 0.7% in 1Q17, the slowest reading in 3 years; the NASDAQ broke 6000 for the first time; Trump backed off a withdrawal from NAFTA; Congress passed a bill to fund the government for one week; and fears of a U.S. confrontation with North Korea continued.
- In the markets… Markets will look towards the FOMC meeting on Wednesday for guidance. While the probability of a hike is unlikely (Bloomberg estimate currently 13.3%), the minutes will be scrutinized as traders look for insight into how the Fed plans to proceed; U.S. nonfarm payrolls, personal income and spending are reported.
- Also on the radar… markets in many countries are closed May 1 for May Day; and Fed Chair Yellen will speak Friday at a women's event.
- Investment Term of the Week: May Day - May Day is a public holiday usually celebrated on May 1. It is an ancient northern hemisphere spring festival. It is also a traditional spring holiday in many cultures. Dances, singing, and cake are usually part of the celebrations that the day includes. In the late 19th century, May Day was chosen as the date for International Workers' Day by the Socialists and Communists of the Second International to commemorate the Haymarket affair in Chicago.
In the investment world May Day has a very different meaning. On May 1, 1975, the stock market changed forever. Commonly referred to as May Day, this date allowed brokerages to charge varying commission rates. Prior to this change, all brokerages charged the same price for stock trades. This was the first time in 180 years that trading fees would be set by market competition, instead of a fixed price.
Over the last several weeks we have shared many of the key principles we believe necessary for successful long-term investing. We encourage you to go back and review each of these principles from time-to-time. As a refresher, here are quick highlights of the seven principles we detailed:
1. Plan on living a long time
2. Cash isn't always king
3. Harness the power of dividends and compounding
4. Avoid emotional biases by sticking to a plan
5. Volatility is normal; don't let it derail you
6. Staying invested matters
7. Diversification can work
While investing certainly is a complicated endeavor, we believe utilizing these principles may help to guide you to your long-term investment goals.
Disclosures: The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of McGee Wealth Management and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. Investing involves risk and you may incur a profit or loss regardless of strategy selected. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The Dow Jones Industrial Average (DJIA), commonly known as "The Dow" is an index representing 30 stock of companies maintained and reviewed by the editors of the Wall Street Journal. The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Past performance does not guarantee future results. There is an inverse relationship between interest rate movements and fixed income prices. Generally, when interest rates rise, fixed income prices fall and when interest rates fall, income prices generally rise. Diversification does not ensure a profit or guarantee against a loss.