Investment Commentary –January 9th, 2018

Market Indices as of Market Close January 9th, 2018
Dow 25,385 (2.70%)
S&P 2,751 (2.92%)
NASDAQ 7,163 (3.77%)
Global DOW 3,183 (3.18%)
Gold $1,314 (0.74%)
OIL $62.94 (4.71%)
US 10Y Treasury 2.54 (13.60%)
Barclay Bond Aggregate (-0.57%)

All main indexes close at records as S&P 500 has best start to year since 1964

All main stock benchmarks closed at records on Tuesday with the S&P 500 notching six consecutive records to kick off a new year, something it has not done since 1964. Confidence over the economy on top of optimism over tax cuts has continued to whet investors’ appetite for stocks. Expectations of another strong quarter of corporate earnings are also helping to support demand for equities. The Dow Jones Industrial Average DJIA, +0.41% rose 106 points, or 0.4%, to 25,389. The S&P 500 SPX, +0.13% added 3 points, or 0.1%, to end at 2,751 while the Nasdaq Composite Index COMP, +0.09% gained 6 points to 7,163.

JP Morgan Thought of the week:

The Eurozone economic recovery continues to go from strength to strength. The unemployment rate has been falling at an approximate pace of 1% per year, reaching a multi-year low of 8.8% for October 2017, leading to consumer confidence reaching its highest level since 2001. As the economy has improved, so too has support for the euro. In Italy, the latest business surveys point to acceleration in growth and support for the euro has increased over the last year. This is particularly significant as we approach the Italian elections in March. Whilst the outcome of the election remains uncertain, the rising level of support for the single currency provides welcome news for any investors who had been concerned about the prospect of Italy leaving the Eurozone.

News around the Rate outlook

The minutes from the latest Federal Reserve policy meeting showed that several board members expressed growing confidence in the strength of the labor market and the economy. Some members also said newly approved tax cuts might require the Fed to take a more aggressive stance this year on raising interest rates. In 2017, the Fed lifted rates three times.

Tech leadership

Information technology stocks led the market higher on Tuesday, kicking off what turned out to be a big week for the sector. The NASDAQ, which is weighted more heavily in tech names than the other major indexes, jumped 1.5% on Tuesday. For the week, the index climbed 3.4%.

As January goes…

Historically, January’s stock market performance has been a strong indicator of what may be in store for the rest of the year. In fact, 72% of the time the S&P 500 has posted a positive return for the year after gaining ground in January, or has gone on to post an annual loss when the market has declined in the first month, according to S&P Dow Jones Indices.

Stuck in reverse

For the first time in eight years, the U.S. automobile industry posted a decline in the number of vehicles sold. A total of 17.2 million vehicles were sold last year, down 1.8% from 2016, according to IHS Markit.

On tap this week:

Thursday: Federal budget, U.S. Department of the Treasury

This day in financial history: January 8th, 1985
Airlines Record Huge Losses
Air Transport Association reports that the U.S. airline industry recorded a combined loss of $2 billion, the worst industry performance since 1978.

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.[MKR]%20[LU_EN].pdf