Investment Commentary – August 5th, 2015
Market Indices as of Market Close August 5th, 2015
Dow 17,540 (-1.59% YTD)
S&P 500 2,100 (1.99% YTD)
NASDAQ 5,140 (8.53% YTD)
Global Dow 2,538 (52 week low 2,375/high 2,644)
10-year Treasury 2.27 (52 week low 1.64/high 2.66)
Gold $1,084 (52 week low $1,074/high $1,325)
Oil $45.14 (52 week low $44.83/high $93.34)
“Stocks close mostly higher; Dow pressured by Disney drop”
U.S. stocks closed mostly higher Wednesday, though the Dow industrials were unable to shake off a weak performance by Disney and energy shares, in a choppy day of trading Wednesday as investors digested conflicting U.S. economic data.
The main indexes advanced in early trade after a softer-than-expected reading on private payroll growth stoked ideas the Federal Reserve might not be so hasty about hiking rates.
But a reading of the service sector indicated signs of economic vigor, surging to a 10-year high in July.
The S&P 500 SPX, +0.31% finished up 6.52 points, or 0.3%, at 2,099.84, after rising around 19 points earlier. The Nasdaq Composite COMP, +0.67% advanced 34.40 points, or 0.7%, to close at 5,139.94, after being up nearly 70 points earlier.
“Fixed Income: A Silver Lining to Rising Rates?”
For fixed income investors, rising interest rates are a double-edged sword. On one hand, they entail price declines for existing bond holdings as bond yields and prices move in opposite directions. However, they also provide opportunities to reinvest proceeds generated from older bonds into new bonds offering healthier yields.
With the potential for the Federal Reserve to raise short-term interest rates this year for the first time since 2006, bond investors should understand the risks of rising rates. But now is not the time to abandon fixed income allocations, which remain an integral component of balanced portfolios.
“Lincoln imposes first federal income tax”
On this day in 1861, Lincoln imposes the first federal income tax by signing the Revenue Act. Strapped for cash with which to pursue the Civil War, Lincoln and Congress agreed to impose a 3 percent tax on annual incomes over $800.
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 investment strategy.