The economy has been picking up steam and the stock market is leading the way with big gains this past week! The tax reform legislation passed late last year has led to many companies providing bonuses and pay raises for employees. Walmart announced one-time bonuses and raising their minimum wage 10% to $11/hour. Wells Fargo raised their minimum wage to $15/hour. American Airlines is giving 130,000 employees bonuses. AT&T gave 200,000 employees a $1000 bonus. Comcast gave 100,000 employees a $1000 bonus. Bank of America gave 145,000 employees a $1000 bonus. These are just some of the household name companies that have employees positively affected by the tax legislation.
The lowering of the highest corporate tax bracket from 35% to 21%, rewards corporations and investors for making investments and taking risk! When an investor can keep more of their return on investment, this is an incentive to invest. We are seeing a tax legislation bump in the stock market and with our country statistically at full employment, this should lead to wage increases like we have already seen with bonuses and hourly wage increases.
As an experienced investor, I also know it feels just like this right before a severe market correction and bear markets. I encourage you to remain focused on your financial objectives and not get too caught up in the emotion of all the great investing news. What a run the stock market has been on though!
RETAIL SALES ROSE IN DECEMBER
Consumers spent freely during the holidays: the latest Census Bureau report shows a nice advance for retail purchases. They improved 0.4% last month, with core retail sales up by the same amount.1
PRODUCER PRICES UNEXPECTEDLY RETREAT
In December, wholesale inflation declined for the first time in 18 months. Even with that 0.1% dip, the Producer Price Index advanced 2.6% for 2017, compared with 1.7% in 2016. Households contended with 2.1% inflation during 2017 according to the Consumer Price Index, which ticked up 0.1% last month. Core consumer prices rose 0.3% in December, so the 2017 core CPI gain was 1.8%.1,2
OIL CLIMBS AGAIN
Last week, prices benefited from reduced reserves and extensions of U.S. sanctions relief against Iran. West Texas Intermediate crude settled at $64.30 Friday on the NYMEX, advancing 4.7% across five trading days. That was its highest price since December 2014.3
ANOTHER SOLID WEEK FOR EQUITIES
Bulls still far outnumber bears on Wall Street, as last week’s major index performances show. For the week, the Dow Jones Industrial Average rose 2.01% to 25,803.19; the Nasdaq Composite, 1.74% to 7,261.06; the S&P 500, 1.57% to 2,786.24. The last five market days also brought a 2.05% gain for the Russell 2000. The PHLX Oil Service index ended the week up 23.24% month-over-month.4
U.S. financial markets are mostly closed on Martin Luther King Jr. Day (futures do trade on Monday morning). Citigroup, Comerica, CSX, and UnitedHealth Group release earnings on Tuesday. Wednesday’s earnings announcements include news from Alcoa, Bank of America, Fastenal, Goldman Sachs, and U.S. Bancorp; in addition, the Federal Reserve offers a new Beige Book. On Thursday, American Express, BoNY Mellon, BB&T, J.B. Hunt, IBM, KeyCorp, and Morgan Stanley announce earnings; investors will consider new initial claims data and a report on December construction activity as well. Friday, Regions Financial, Schlumberger, and SunTrust Bank report earnings, and the preliminary January consumer sentiment index from the University of Michigan appears.
|% CHANGE||YTD||1-YR CHG||5-YR AVG||10-YR AVG|
|REAL YIELD||8/11 RATE||1 YR AGO||5 YRS AGO||10 YRS AGO|
|10 YR TIPS||0.54%||0.38%||-0.63%||1.56%|
Sources: wsj.com, bigcharts.com, treasury.gov – 1/12/184,5,6,7
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.
1 – investing.com/economic-calendar/ [1/12/18]
2 – thestreet.com/story/14446654/1/producer-price-index-falls-for-first-time-since-2016.html [1/11/18]
3 – marketwatch.com/story/oil-prices-slip-from-3-year-high-as-traders-wait-for-trump-move-on-iran-2018-01-12 [1/12/18]
4 – markets.wsj.com/us [1/12/18]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F12%2F17&x=0&y=0 [1/12/18]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F12%2F17&x=0&y=0 [1/12/18]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F12%2F17&x=0&y=0 [1/12/18]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F11%2F13&x=0&y=0 [1/12/18]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F11%2F13&x=0&y=0 [1/12/18]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F11%2F13&x=0&y=0 [1/12/18]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F11%2F08&x=0&y=0 [1/12/18]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F11%2F08&x=0&y=0 [1/12/18]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F11%2F08&x=0&y=0 [1/12/18]
6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [1/12/18]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [1/12/18]