Presented by Michael Manning
General market news
- Equity markets started the New Year in a much less festive mood than they ended 2013. The S&P 500 declined 0.51 percent last week, with much of that loss coming in the year’s first two days of trading.
- Volumes in the equity markets were extremely light over the last few weeks, which led to some volatility. As more professional investors return to work after holiday breaks, volume will likely pick up. With earnings season set to start next week, however, volatility may remain.
- Yields on the 10-year Treasury stood around 3 percent early Monday, a level that should attract more investors. While we have seen moves higher, we expect the addition of more investors to help keep the number close to 3 percent, and any moves higher should be temporary for the time being.
Equity Index | Week-to-Date % | Month-to-Date % | Year-to-Date % | 12-Month % |
S&P 500 | -0.51% | -0.90% | -0.90% | 28.18% |
Nasdaq Composite | -0.57% | -1.05% | -1.05% | 35.07% |
DJIA | -0.03% | -0.62% | -0.62% | 26.05% |
MSCI EAFE | -0.69% | -1.09% | -1.09% | 20.40% |
MSCI Emerging Markets | -0.67% | -1.18% | -1.18% | -6.01% |
Russell 2000 | -0.41% | -0.65% | -0.65% | 34.25% |
Source: Bloomberg
Fixed Income Index | Month-to-Date % | Year-to-Date % | 12-Month % |
U.S. Broad Market | 0.06% | 0.06% | -1.72% |
U.S. Treasury | 0.06% | 0.06% | -2.58% |
U.S. Mortgages | -0.03% | -0.03% | -1.29% |
Municipal Bond | 0.09% | 0.09% | -2.82% |
Source: Bloomberg
What to look forward to
This week’s most important reports will come at its beginning and its end. Hopefully, the ISM Non-Manufacturing survey will follow the other ISM report in posting a strong number. This segment of the economy led in mid-2013 but has slipped a bit in recent months. Nonetheless, it remains in comfortably positive territory.
At week’s end, investors will eagerly await a series of important employment data. The Nonfarm Payrolls report will likely be the most critical. Last month, it rose by a reasonably strong amount, giving the Fed the ammunition it needed to begin tapering asset purchases.
The end of emergency unemployment benefits will eventually affect the Unemployment Rate, possibly decreasing it artificially. This effect won’t likely manifest itself until the next employment report, however. Employment data is always very important, but it is even more critical now, due to its close connection to the rate of Fed intervention.
Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index. The Bank of America Merrill Lynch U.S. Broad Market Index tracks the performance of U.S. dollar-denominated investment-grade debt publicly issued in the U.S. domestic market, including U.S. Treasury, quasi-government, corporate, securitized, and collateralized securities. The Bank of America Merrill Lynch U.S. Treasury Index tracks the performance of U.S. dollar-denominated sovereign debt publicly issued by the U.S. government in its domestic market. The Bank of America Merrill Lynch U.S. Mortgage-Backed Securities Index tracks the performance of U.S. dollar-denominated fixed-rate and hybrid residential mortgage pass-through securities publicly issued by U.S. agencies in the U.S. domestic market. The Bank of America Merrill Lynch U.S. Municipal Securities Index tracks the performance of U.S. dollar-denominated investment-grade tax-exempt debt publicly issued by U.S. states and territories, and their political subdivisions, in the U.S. domestic market.
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For IARs: Michael Manning is a financial advisor located at Manning Wealth Management. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. We can be reached at (619) 237-9977 or at www.manningwm.com.
Authored by the Investment Research team at Commonwealth Financial Network.
© 2014 Commonwealth Financial Network®
