Weekly Market Update, December 1, 2014
Presented by Manning Wealth Management, Inc
General market news
- Last week’s bond rally continued strong after a day off on Thursday, with the 10-year Treasury yield opening at 2.17 percent early Monday and the 30-year at 2.88 percent. The move to bonds comes as investors worry about global inflation, or the lack thereof, and the time it could take to turn the European economy around.
- With German and French government debt at record low yields, there’s only so high U.S. rates can rise, as investors seeking safety will reach for higher-yielding, more stable U.S. debt. The German bund opened Monday at 0.698 percent and the French 10-year bond at 0.96 percent. U.S. debt is the 20th highest-yielding debt in the world, with the likes of Italy, Spain, and Ireland yielding less.
- Equity markets drifted upward last week, setting all-time highs on the Dow Jones Industrial Average and the S&P 500 Index. The energy sector continued its slide, declining 9.50 percent after OPEC announced it would not cut oil production in light of low crude prices. In spite of energy’s weakness, strong performance from the technology and consumer discretionary sectors was enough to put indices in the green for the week.
- In the absence of fundamental data, the market will look to macroeconomic factors this week to gauge the overall health of the economy, as holiday sales numbers trickle in and other important data points are released.
Equity Index | Week-to-Date % | Month-to-Date % | Year-to-Date % | 12-Month % |
S&P 500 | 0.24% | 2.69% | 13.97% | 16.85% |
Nasdaq Composite | 1.73% | 3.70% | 16.09% | 19.54% |
DJIA | 0.17% | 2.86% | 9.92% | 13.42% |
MSCI EAFE | 0.64% | 1.58% | -0.65% | 0.86% |
MSCI Emerging Markets | 0.85% | -0.27% | 3.50% | 2.18% |
Russell 2000 | 0.11% | 0.09% | 1.99% | 4.00% |
Source: Bloomberg
Fixed Income Index | Month-to-Date % | Year-to-Date % | 12-Month % |
U.S. Broad Market | 0.76% | 6.19% | 5.51% |
U.S. Treasury | 0.92% | 5.75% | 4.65% |
U.S. Mortgages | 0.70% | 5.94% | 5.43% |
Municipal Bond | 0.14% | 9.14% | 8.76% |
Source: Bloomberg
What to look forward to
We will start the week with data on manufacturing and the ISM Manufacturing Index, which is expected to contract slightly. Releases later in the week include ISM Non-Manufacturing and Factory Orders.
The Employment report will be released Friday, with the situation expected to remain mostly unchanged.
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 Barclays Capital Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Barclays Capital Mortgage-Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Barclays Capital Municipal Bond Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million. The Barclays Capital U.S. Treasury Inflation Protected Securities (TIPS) Index measures the performance of intermediate (1- to 10-year) U.S. TIPS.
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Manning Wealth Management is a financial advisor and consultant office located at 2550 5th Ave Suite 800 San Diego, CA 92103. They offer securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. They 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®
