Investment Commentary – May 25th, 2016
Market Indices as of Market Close May 25th, 2016
Dow 17,851 (2.45% YTD)
S&P 2,090 (2.28% YTD)
NASDAQ 4,894 (-2.25% YTD)
Global Dow 2,334 (2,033 52 week low /2,616 high)
10-year Treasury 1.87 (1.53 52 week low /2.50 high)
Gold 1,227 ($1,049 52 week low /high $1,308)
Oil $49.68 ($31.61 52 week low /high $63.77)
Wall Street ascends for a second day
Wall Street rose robustly for a second straight session on Wednesday, helped by higher oil prices and investors becoming more comfortable with the prospect of an interest rate hike as early as next month. The energy sector led the way, up 1.4 percent as oil prices rose toward $50 a barrel following a report of a larger-than-expected drop in U.S. crude inventories, adding to expectations that a steep selloff in the commodity may be over. The S&P financial index .SPSY rose 1.08 percent and was near its highest this year. Bank of America (BAC.N), JPMorgan (JPM.N) and Citigroup (C.N) were up over 1.5 percent. Comments from policymakers in recent days and upbeat U.S. economic data have raised expectations that the Federal Reserve could pull the trigger on a rate increase much sooner than previously thought.
Traders are now pricing in a 38-percent chance for a rate hike in June and 45 percent in July, according to CME Group’s Fed Watch tool. “What you’re seeing is a recognition that this is going to happen and investors are getting more comfortable with it,” said Kurt Brunner, a portfolio manager at Swarthmore Group in Philadelphia. “There’s recognition that economic growth is okay.” At 2:09 pm, the Dow Jones industrial average .DJI was up 0.86 percent at 17,858.97 points and the S&P 500 .SPX had gained 0.68 percent to 2,090.21. The NASDAQ Composite .IXIC added 0.58 percent to 4,889.43. Gains were broad-based, with nine of the 10 major S&P sectors trading higher. The S&P 500 has risen about 15 percent from its February lows and is up about 2 percent for the year.
Lord Abbett: How Spousal IRAs Can Build Nest Eggs
Often overlooked by couples caring for children and/or elderly parents, spousal IRAs can be a valuable tool to save for retirement. A common misconception I often hear is that you must have taxable compensation to fund an IRA, as though not having earned income meant that you were out of luck either beginning or further building a nest egg. This is a very costly myth. Generally, the only requirement an investor needs to fund an IRA is earned income. But like most retirement rules, there is an exception. Married couples that want to boost their household retirement savings, while providing a stay-at-home spouse the ability to build a nest egg, can certainly do so. This arrangement is often referred to as a spousal IRA.
Fund Your Spouse
For those clients who are married, the non-working spouse may be able to make an IRA contribution based on their spouse’s taxable compensation for the year. For example, spousal IRAs serve well in families in which a spouse has left the workforce to stay at home with the kids or for older clients in which one spouse may have retired early. Since IRAs can’t be held jointly, a married couple can contribute the maximum amount to two separate IRAs. As a result, the working spouse can contribute $5,500 to his or her own IRA, and contribute another $5,500 to the IRA in the name of the non-working spouse, for a total of $11,000. For those who are older than 50 by the end of 2016, the limits are increased, to $6,500 per IRA, for a total of $13,000.
THIS DAY IN FINANCIAL HISTORY
May 24, 1989: Nation’s Worst Oil Spill
The nation’s biggest oil spill occurred when the giant Exxon Valdez supertanker hit a reef, causing it to leak 11 million gallons of oil into Prince William Sound.
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.
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