Presented by Michael Manning
General Market News
- Equity markets slid lower last week, and the S&P 500 posted its first weekly loss since early October. Losses for most major domestic large-cap indices were grouped tightly in the 1.50 percent1.60 percent range. Unlike in previous periods, there was no late-week rally to offset the declines that took place earlier in the week.
- Asset flows into equity markets have been very strong as of late. Quarter-to-date, more than $37 billion of net flows have gone into broad-market domestic equity mutual funds and exchange-traded funds.
- The yield on the 10-year Treasury stood at 2.85 percent early Monday morning, after being as high as 2.88 percent late last week.
- The Federal Reserve will be meeting on Tuesday and Wednesday of this week, and it will be interesting to see if the commentary changes after recent better-than-expected economic numbers. This is also Ben Bernanke’s second-to-last meeting as chairman.
Equity Index | Week-to-Date % | Month-to-Date % | Year-to-Date % | 12-Month % |
S&P 500 | 1.60% | 1.60% | 27.05% | 27.76% |
Nasdaq Composite | 1.50% | 1.42% | 34.20% | 35.54% |
DJIA | 1.59% | 1.93% | 23.22% | 22.65% |
MSCI EAFE | 1.35% | 3.47% | 17.50% | 19.08% |
MSCI Emerging Markets | 1.03% | 2.58% | 3.54% | 2.15% |
Russell 2000 | 2.11% | 3.07% | 31.95% | 36.19% |
Source: Bloomberg
Fixed Income Index | Month-to-Date % | Year-to-Date % | 12-Month % |
U.S. Broad Market | 0.37% | 1.98% | 1.88% |
U.S. Treasury | 0.53% | 2.85% | 2.87% |
U.S. Mortgages | 0.36% | 1.27% | 1.16% |
Municipal Bond | 0.25% | 2.78% | 3.64% |
Source: Bloomberg
What to Look Forward To
Analysts are anticipating a rise of 0.6 percent in Industrial Production, which could in turn lead to Capacity Utilization climbing to 78.4 percent. In 2009, utilization rates bottomed at 66.9 percent. After a sharp rebound, they have now been rising at a very modest pace. Still, they remain below levels seen in the mid-2000s and are not yet high enough to be inflationary.
Building Permit Applications may have fallen 4.7 percent in November, if economists’ estimates are correct. The housing market has continued to make progress, though at a slightly slower pace. Additionally, Existing Home Sales may have fallen 2 percent in November.
Leading Economic Indicators may have increased 0.7 percent in November. As long as this stays positive, investors are unlikely to fear a major pullback in growth.
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.
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. He can be reached at 619-237-9977 or at www.manningwm.com.
Authored by the Investment Research team at Commonwealth Financial Network.
© 2013 Commonwealth Financial Network®
