Investment Commentary –August 29th, 2017

Market Indices as of Market Close August 29th, 2017
Dow 21,865 (10.64% YTD)
S&P 2,446 (9.27% YTD)
NASDAQ 6,301 (17.07% YTD)
Global Dow 2,830 (11.96%)
Gold $1,314 (12.77%)
OIL $46.32 (-18.78%)
US 10Y Treasury 2.135 (-31.01%)
Barclay Bond Aggregate (3.44% YTD)

Wall Street ends higher as fear over North Korea dissipates

NEW YORK (Reuters) – Major U.S. stock indexes ended higher on Tuesday after recovering from steep early losses triggered by fears that hostilities in the Korean Peninsula could escalate.
The S&P 500 fell as much as 0.66 percent after U.S. President Donald Trump warned that all options are on the table for the United States to respond after North Korea fired a ballistic missile over a Japanese island in a new show of force.

“When the president says ’all options are on the table,’ the best strategy for investors is sometimes to do nothing,” said Brian Jacobsen, senior investment strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.

Market analysts were relieved that the rift did not escalate further, with Trump’s focus on the devastation caused by Tropical Storm Harvey, which was the most powerful hurricane to strike Texas in 50 years when it made landfall last week.

Around the Web:

Debt ceiling looms

Congress has about five weeks before it faces a deadline to lift the government’s debt ceiling, but financial markets already reflect concern that an agreement will be difficult to reach, perhaps leading to a temporary shutdown of some government operations. Yields of U.S. Treasury bills due a few days after the deadline will pass have been rising to levels higher than yields of bills maturing a few weeks after that point.

Tight inventory

Fewer homes are on the market, and the trend is depressing sales activity. The government reported that sales of new homes fell more than 9% in July and sales of previously owned homes slipped more than 1%.

Yellen steers clear

Speaking at an economic symposium in Jackson Hole, Wyoming, U.S. Federal Reserve Chair Janet Yellen offered no clues about any policy shifts or further interest-rate increases, focusing instead on defending regulations enacted following the financial crisis of 2008. During her speech, the Dow rose and the U.S. dollar fell.

On Tap for the rest of the week:

Wednesday: Second-quarter GDP, second estimate, U.S. Bureau of Economic Analysis, ADP National Employment Report, ADP

Friday: Monthly jobs and unemployment, U.S. Bureau of Labor Statistics
Vehicle sales, U.S. Department of Commerce
University of Michigan Index of Consumer Sentiment


Leaders this past week included utilities and services. Laggards included consumer goods and conglomerates.

Investment Definition: Stock Split

A stock split is a decision by the company’s board of directors to increase the number of shares that are outstanding by issuing more shares to current shareholders. For example, in a 2-for-1 stock split, an additional share is given for each share held by a shareholder.

The bottom line is a stock split is used primarily by companies that have seen their share prices increase substantially and although the number of outstanding shares increases and price per share decreases, the market capitalization (and the value of the company) does not change. As a result, stock splits help make shares more affordable to small investors and provides greater marketability and liquidity in the market.

The views presented are not intended to be relied on as a forecast, research or investment advice and are the opinions of the sources cited and are subject to change based on subsequent developments. They are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investments.