Investment Commentary – May 20, 2015
Dow – 18,285.40 (5/20/15 close)
S&P 500 – 2,125.85 (5/20/15 close)
10-year Treasury – 2.25% (5/20/15 close)

  • U.S. equities advanced last week, with the S&P 500 Index notching new record closes on Thursday and Friday.
  • A pullback in bond yields, more mergers-and-acquisitions (M&A) activity and a wave of companies buying back shares all aided stocks last week.
  • In addition, in what’s becoming a bit of a pattern, last week brought little evidence of inflation, despite rising expectations for a spike.
  • Analysts believe inflation will remain low for a variety of reasons: a modest recovery, constrained wages and the fact that the recent rally in oil may not have much further to go.
  • This environment of good, but not great, growth, range-bound oil prices and low inflation supports our basic views on investment positioning.
  • Analysts suggest investors stick with a few key themes: a preference for stocks over bonds, a healthy allocation to international equities and an opportunistic stance in fixed income.
  • Lower than expected numbers on international trade, manufacturing and wholesale inventories, and retail sales likely will push the second estimate of 1Q 2015 real GDP into negative territory. Despite some measured weakness this quarter, we see the expansion continuing at its moderate pace.
  • Job growth last month shifted to higher-paying positions in a sign of a broadening labor market recovery. Professional and business services, construction and health care led the solid 223,000 job gains reported by the Labor Department last Friday.

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.