Investment Commentary – July 22nd, 2015

Dow – 17,935.74 (6/17/15 close) (0.63% YTD)
S&P 500 – 2,100.44 (6/17/15 close) (2.02% YTD)
NASDAQ – 5,064.88 (6/17/15 close) (0.18% YTD)
10-year Treasury – 2.32 % (6/17/15 close)
Gold-1,185 (6/17/2015 close)

  • Stocks were mixed last week, with China up, the U.S. essentially flat and other developed markets slipping. In the U.S., the Dow Jones Industrial Average inched up 0.27% to 17,898, while the S&P 500 Index rose a modest 0.09% to end the week at 2,094. The Nasdaq Composite Index fared worse, declining 0.33% to 5,051. Meanwhile, the yield on the 10-year Treasury hit a new high for the year, before slipping back and ending the week unchanged at 2.40%.
  • The Federal Reserve on Wednesday held its benchmark interest rate near zero, but central bankers believe improving U.S. economic growth is likely to warrant one or two interest rate increases before the end of the year. Fed Chairwoman Janet Yellen said the economy has managed to escape the “soft patch” of the first quarter.
  • Analysts said the labor market is improving and some of the downward pressure on inflation from energy prices is abating, but added that more progress is needed before the central bank would be ready to pull the trigger and raise rates.
  • Analysts believe that despite disappointing returns due to a stronger dollar in 2014, international exposure is still warranted given growth prospect abroad.
  • S&P 500 operating earnings are estimated to be $25.80 for the first quarter of 2015, representing year-over year growth of -5.6%. Lower earnings were mainly due to low oil prices and the strong U.S. dollar. S&P 500 earnings excluding the energy sector grew at 8.5%.
  • Investors should look for areas of value within fixed income, such as tax-exempt municipal bonds and high yield bonds. The backup in yields has also returned some value to Treasury Inflation Protected Securities (TIPS).

The views presented are not intended to be relied on as a forecast, research or investment adviceand 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.