Mixed week on Wall Street as holidays approach

2017 has been a stock market year to be thankful for!  Last week was a solid one for the Nasdaq while the DOW and S&P 500 were off a bit.  This will be a short week for the stock market as it is closed Thursday and closes early Friday.

Late last week, I spoke to several contacts who indicated mutual fund capital gain distributions this year are likely to be very high.  These distributions typically occur between December 5th and 20th and are not precisely predictable.  These distributions typically decrease the share price of the distributing mutual fund which causes concern for some clients who wonder why the share price plummeted.

Example: If you have a mutual fund with a share price of $20 and the fund distributes $3 per share, then the share price is now $17 per share.  You still own a share priced at $17 and you received $3, so you lost nothing.  However, if you checked the share price on your smartphone and saw the price plummet 15% in a day ($3/$20) then you may get alarmed. 

This will happen much more than prior years due to the very strong stock market and how mutual funds are required to distribute your share of the capital gains.  These distributions are subject to income taxes.

YEARLY INFLATION BACK AT 2.0%

Consumer costs ticked up just 0.1% in October, according to the Department of Labor. The marginal monthly gain left the annualized increase in the headline Consumer Price Index at 2.0%, down from 2.2% a month earlier. The core CPI has risen 1.8% in 12 months. Gasoline prices influenced the October headline number: they fell 2.4% in October after a 13.1% September leap.1

RETAIL SALES BEAT EXPECTATIONS

Analysts surveyed by MarketWatch thought retail sales would be flat for October after their huge surge in September. That was not so. They surprised to the upside with a gain of 0.2%. Minus auto buying, the advance was 0.1%.2

DEVELOPERS PICK UP THE PACE AS FALL BEGINS

Newly released Census Bureau data shows a 13.7% monthly increase in housing starts in October as well as a 5.9% rise for building permits. Single-family home construction strengthened 5.3% last month.3

NASDAQ OUTPERFORMS DOW, S&P 500

After a volatile five days, the Nasdaq Composite closed 0.47% higher on November 17 than it had on November 10: 6,782.79. The trading week was tougher for the Dow Jones Industrial Average, which declined 0.27% to 23,358.24, and the S&P 500, which lost 0.13% on the way to a Friday settlement of 2,578.85. The Russell 2000 added 1.19% to wrap up the week at 1,492.82. Wall Street’s hottest index over the past year has been the PHLX Semiconductor – as of Friday, it had gained 49.77% in the past 52 weeks.4

This Week:

Monday, Agilent Technologies and Urban Outfitters reveal Q3 results. On Tuesday, investors consider earnings announcements from Campbell Soup, Hormel Foods, and Lowe’s, plus the latest new home sales report from the National Association of Realtors; also, Federal Reserve chair Janet Yellen stops by New York University for a moderated Q&A session. The Fed releases the minutes from its November policy meeting on Wednesday; Wall Street will also keep an eye out for the final November consumer sentiment index from the University of Michigan, a new report on durable goods orders, and earnings from Deere & Co. On Thursday, U.S. financial markets are closed for Thanksgiving. Friday, Wall Street reopens for a shortened trading session ending at 1:00pm EST.

% CHANGE YTD 1-YR CHG 5-YR AVG 10-YR AVG
DJIA +18.19 +23.56 +17.11 +7.73
NASDAQ +26.00 +27.16 +27.55 +15.72
S&P 500 +15.19 +17.91 +17.93 +7.68
REAL YIELD 8/11 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.49% 0.42% -0.81% 1.80%

Sources: wsj.com, bigcharts.com, treasury.gov – 11/17/174,5,6,7
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.10-year TIPS real yield = projected return at maturity given expected inflation.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

Citations.
1 – cnbc.com/2017/11/15/us-consumer-price-index-oct-2017.html [11/15/17]
2 – marketwatch.com/economy-politics/calendars/economic [11/17/17]
3 – builderonline.com/money/economics/housing-starts-permits-jump-in-october_o [11/17/17]
4 – markets.wsj.com/us [11/17/17]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F17%2F16&x=0&y=0 [11/17/17]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=11%2F17%2F16&x=0&y=0 [11/17/17]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=11%2F17%2F16&x=0&y=0 [11/17/17]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F16%2F12&x=0&y=0 [11/17/17]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=11%2F16%2F12&x=0&y=0 [11/17/17]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=11%2F16%2F12&x=0&y=0 [11/17/17]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F16%2F07&x=0&y=0 [11/17/17]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=11%2F16%2F07&x=0&y=0 [11/17/17]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=11%2F16%2F07&x=0&y=0 [11/17/17]
6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [11/17/17]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [11/17/17]