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Weekly Market Snapshot


April 21, 2017

Market Commentary
by Scott J. Brown, Ph.D., Chief Economist

Stock market participants came back from the Easter weekend in a somewhat better mood (as tensions with North Korea subsided). There were some concerns about the French election (first round on April 23, second round on May 7), but also some optimism that Congress might be able to advance some of the Trump agenda (tax reform, in particular) when it returns from its two-week recess.

There were a few surprises in the economic data reports, but the figures were largely inconsequential for the financial markets. Industrial production rose in March, but the increase was concentrated in increased output from utilities (reflecting a return to more normal temperatures following an unseasonably warm February). The Fed’s Beige Book, the anecdotal summary of conditions from around the country, showed growth remaining “modest to moderate,” but with signs of a further tightening of labor market conditions. A couple of Fed districts reported that labor market constraints were beginning to limit economic growth.

Next week, the focus is expected to be on the GDP report. As usual, there is a lot of uncertainty in the advance estimate. Consumer spending, which accounts for 69% of GDP, slowed sharply in January and February, while unit auto sales and retail sales fell in March. This slowdown in consumer spending follows a strong showing in 4Q16 – so one soft quarter is not too worrisome.  Moreover, market participants have already begun to dismiss a soft 1Q GDP figure as reflecting a bias in the seasonal adjustment (first quarter growth has tended to be weak in recent years).  Congress is back in session and the current Continuing Resolution (which authorizes spending) runs through Friday. It should be easy enough to come up with another CR and avoid a government shutdown. The debt ceiling became binding in mid-March (Treasury can employ extraordinary measures, as a workaround, to fund the government until autumn), but we may see an extension of the debt limit folded into the CR.


Indices

  Last Last Week YTD return %
DJIA 20578.71 20591.86 4.13%
NASDAQ 5916.78 5836.16 9.91%
S&P 500 2355.84 2344.93 5.23%
MSCI EAFE 1783.67 1785.40 5.92%
Russell 2000 1384.15 1359.20 1.99%

Consumer Money Rates

  Last 1 year ago
Prime Rate 4.00 3.50
Fed Funds 0.91 0.37
30-year mortgage 4.04 3.58

Currencies

  Last 1 year ago
Dollars per British Pound 1.281 1.432
Dollars per Euro 1.072 1.129
Japanese Yen per Dollar 109.32 109.46
Canadian Dollars per Dollar 1.347 1.274
Mexican Peso per Dollar 18.790 17.470

Commodities

  Last 1 year ago
Crude Oil 50.71 43.18
Gold 1283.80 1250.30

Bond Rates

  Last 1 month ago
2-year treasury 1.18 1.26
10-year treasury 2.25 2.42
10-year municipal (TEY) 3.17 3.55

Treasury Yield Curve – 04/21/2017


As of close of business 04/20/2017


S&P Sector Performance (YTD) – 04/21/2017



As of close of business 04/20/2017


Economic Calendar

April 27  —  Durable Goods Orders (March)
April 28  —  Real GDP (1Q17, advance estimate)
May 1  —  ISM Manufacturing Index (April)
May 3  —  FOMC Policy Decision (no press conference)
May 5  —  Employment Report (April)
June 14  —  FOMC Policy Decision (Yellen press conference)

 

All expressions of opinion reflect the judgment of the Research Department of Raymond James & Associates, Inc. and are subject to change. There is no assurance any of the forecasts mentioned will occur or that any trends mentioned will continue in the future. Investing involves risks including the possible loss of capital. Past performance is not a guarantee of future results. International investing is subject to additional risks such as currency fluctuations, different financial accounting standards by country, and possible political and economic risks, which may be greater in emerging markets. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, and state or local taxes. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Municipal bonds may be subject to capital gains taxes if sold or redeemed at a profit. Taxable Equivalent Yield (TEY) assumes a 35% tax rate.

The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 index is an unmanaged index of small cap securities which generally involve greater risks. An investment cannot be made directly in these indexes. The performance noted does not include fees or charges, which would reduce an investor's returns. U.S. government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the U.S. government.

Commodities trading is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Specific sector investing can be subject to different and greater risks than more diversified investments. Gross Domestic Product (GDP) is the annual total market value of all final goods and services produced domestically by the U.S. The federal funds rate (“Fed Funds”) is the interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight. The prime rate is the underlying index for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. Material prepared by Raymond James for use by financial advisors. Data source: Bloomberg, as of close of business April 21, 2017.