Weekly Update – April 24, 2017

Domestic stocks posted losses on Friday, April 21, largely due to investor concerns about the French election. Despite these daily losses, U.S. indexes broke their two-week losing streak, with the S&P 500 adding 0.85%, the Dow gaining 0.46%, and the NASDAQ increasing 1.82%. International stocks in the MSCI EAFE grew by 0.18%.

What Did We Learn Last Week?

  • The French Election Is Concerning Investors
    Uncertainty surrounding France’s presidential election contributed to investor caution last week. After Sunday’s ballot, National Front candidate Marine Le Pen will advance to the second round of voting on May 7, which decides the new president. Le Pen has promised to remove France from the European Union if she wins, a choice that could affect markets and currencies.
  • Quarterly Earnings Reports Are Mostly Strong
    By Friday morning, 95 companies in the S&P 500 had reported their quarterly earnings; 77% of them beat earnings-per-share estimates.
  • Existing Home Sales Jumped 4.4% in March
    Sales of existing homes hit levels not seen since 2007, and median home prices are up 6.8% over a year ago. Supply levels remain tight, and demand is high, as 48% of homes sold last month were on the market for less than a month.
  • Housing Starts Declined 6.8% in March
    While the headline number for housing starts may seem pretty disappointing, it largely reflects the results of a return to typical March weather after unseasonably mild weather boosted starts in January and February. Overall, housing starts are up 9.2% over this time last year.
  • The Consumer Price Index Missed Expectations
    Declines in gas and other energy prices contributed to the U.S. Consumer Price Index (CPI) falling 0.3% in March—its first monthly decline in more than a year.
  • Tax-Plan Information May Be on the Horizon
    On April 20, Treasury Secretary Steve Mnuchin indicated that tax reform remains important. The next day, President Trump said a tax plan should be coming this week.
  • Oil Prices Dropped
    Crude oil prices fell below $50 a barrel after losing 2.15% on Friday. Investors are showing concern about whether output decreases by OPEC can balance out against increasing U.S. production and prevent oversupply.

What’s Ahead

Moving into the last week of April, we will learn both first quarter GDP readings and gain further insight into consumer confidence and housing performance. On Friday, April 28, initial readings for first quarter GDP will help deepen our understanding of where the economy stands right now. Consensus estimates are at a soft 1.1% growth, even lower than last quarter’s 2.1% increase. After seeing this week’s low CPI numbers, combined with retail and inventory data, Barclays decreased its GDP estimate to only 0.8%.

Last week provided a variety of data and perspectives that are continuing to reveal themselves. As momentum from the French presidential outcomes and our own economic growth unfolds, we will watch these developments closely. Meanwhile, we encourage you to continue a long-term focus on your goals, and we are here to discuss any questions you may have along the way.

ECONOMIC CALENDAR

Tuesday: S&P CoreLogic Case-Shiller HPI, New Home Sales, Consumer Confidence
Wednesday: EIA Petroleum Status Report
Thursday: Durable Goods Orders, International Trade in Goods, Pending Home Sales Index
Friday: GDP, Employment Cost Index, Consumer Sentiment


Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Diversification does not guarantee profit nor is it guaranteed to protect assets. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. You cannot invest directly in an index. Consult your financial professional before making any investment decision. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.