Weekly Market Commentary
May 22, 2017

This morning the sun is shining after a weekend of cold May rain here in Arden Hills, MN. The view out of the Counsel Wealth windows is beautiful as I see people escaping from the offices for a quick walk around the building. I am reminded of the beauty of living in a place with seasons.

The Markets

How much is too much?

There has been no shortage of drama since the new administration took office – legislative setbacks, controversial hiring and firing, and fiery tweets on various topics. Regardless, U.S. investors and markets remained stalwart until last week when the CBOE Volatility Index (a.k.a. the fear gauge) jumped 46 percent higher and markets declined.

Financial Times explained:

“…a range of stock benchmarks made their biggest single-day fall since November, as the political controversy over Donald Trump ties with Russia undermined investors’ faith in the administration’s ability to enact its pro-growth policies. Markets subsequently steadied, but investors are primed for further volatility as the White House faces the distraction of a lengthy inquiry led by an independent special counsel.”

Markets recovered some ground late in the week as the influence of Washington, D.C. drama was offset by strong earnings news. On Friday, FactSet reported first quarter earnings results were in for 95 percent of the companies in the Standard & Poor’s 500 (S&P 500) Index and 75 percent had beaten estimates. Altogether, corporate earnings were about 6.0 percent higher than expected.

Earnings performance was particularly strong for companies in the Information Technology, Healthcare, and Financials sectors, and relatively weak for companies in the Telecom Services, Real Estate, and Consumer Staples sectors. 

Brace yourself. Next week may be bouncy. The Federal Reserve Open Market Committee will release minutes from its most recent meeting. In addition, we’ll receive the administration’s proposed budget, along with new economic data and consumer sentiment readings.


Data as of 5/19/17

1-Week

Y-T-D

1-Year

3-Year

5-Year

10-Year

Standard & Poor's 500 (Domestic Stocks)

-0.4%

6.9%

16.8%

8.1%

12.6%

4.6%

Dow Jones Global ex-U.S.

0.4

11.9

17.9

-0.3

5.8

-1.1

10-year Treasury Note (Yield Only)

2.2

NA

1.9

2.5

1.7

4.8

Gold (per ounce)

1.7

8.0

-0.1

-1.3

-4.7

6.6

Bloomberg Commodity Index

1.5

-3.2

0.1

-14.5

-9.0

-7.0

DJ Equity All REIT Total Return Index

1.4

2.6

7.7

8.8

10.8

5.5

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

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Paul S. McCready, CFP, CFS, RFC

President

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