Investment Commentary – May 23rd, 2017

Market Indices as of Market Close May 23rd, 2017
Dow 20,938 (5.95% YTD)
S&P 2,398 (7.09% YTD)
NASDAQ 6,138 (14.04% YTD)
Gold $1,251 (8.17%)
OIL $51.51 (-9.23%)
US 10Y Treasury 2.287 (-15.85%)
Barclay Bond Aggregate (2.07% YTD)

Wall Street edges higher as investors assess Trump’s budget

Wall Street edged higher on Tuesday with investors relieved by the release of President Donald Trump’s budget plan, but gains were tempered by declines in consumer discretionary stocks.

Based on the latest available data, the Dow Jones Industrial Average .DJI was up 44.45 points, or 0.21 percent, to 20,939.28, the S&P 500 .SPX had gained 4.48 points, or 0.19 percent, to 2,398.5 and the Nasdaq Composite .IXIC had added 5.09 points, or 0.08 percent, to 6,138.71.

Market-moving headlines of the past Week:

HOUSING GAINS: Shares of U.S. homebuilders rallied on Monday after a report showed strong housing market growth. Sales of existing homes grew in the first quarter at the fastest pace since 2007, while home prices posted the sharpest quarterly gain in nearly two years.

TECH TROUBLE: The 1.8% drop for both the S&P 500 and the Dow in Wednesday’s market rout was dwarfed by the 2.6% plunge in the NASDAQ Composite, which had climbed to a record high on Tuesday. The NASDAQ has a high concentration of information technology stocks, and the index has outperformed the S&P 500 and the Dow year to date.

MORE FALLOUT: Financials sector stocks also were big losers in Wednesday’s market turmoil, as a financials index posted a 3.0% drop. In contrast, U.S. government bond prices posted their biggest one-day rally in nearly a year, sending bond yields lower.

CHINA LIQUIDITY: A move by China’s central bank on Tuesday to pump additional cash into the nation’s financial system was the largest such cash injection in nearly four months. Analysts said the move was an attempt to restore investor confidence following a recent government campaign to crack down on speculative investing fueled by debt.

BRAZILIAN SELL-OFF: A Brazilian stock index plunged 8.8% on Thursday following reports that the nation’s president was being investigated in connection with alleged bribery. The country’s Supreme Court confirmed that Michel Temer is under investigation, and he denied any wrongdoing.

On Tap:

Wednesday: Release of minutes from May 2–3 meeting of the U.S. Federal Reserve Board; existing home sales, National Association of Realtors

Friday: First-quarter U.S. GDP, second estimate, U.S. Bureau of Economic Analysis; University of Michigan Index of Consumer Sentiment; durable goods orders, U.S. Census Bureau

Leaders this past week include Utilities. Laggards include Healthcare, Technology, Financials and Basic Materials.

On this day in 1946, the Railroad Trainmen and Locomotive Brotherhoods started a strike to improve wages after their return from WWII. Because the nation was still heavily dependent on railways for transportation of goods the strike was short-lived and the workers got their wage increase.

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.