Market Volatility Returns - July 6, 2017

Submitted by Aspect Wealth Management on July 6th, 2017

Market Volatility Returns

July 6, 2017

As Q2 ended, markets hit a six-week volatility high. While the tech sector declined during the week, consumer discretionary and industrial sectors drove stocks higher on Friday. The tech-heavy NASDAQ slumped 1.99%, the S&P fell 0.61% and the DOW dropped 0.21%. Globally, the MSCI EAFE declined 0.32%, and European markets as well as most of the Asian markets finished the week down.

The Fed reported during the week that the largest U.S. banks passed the stress test evaluating their financial soundness. The test results indicate that banks have the capital structures to withstand difficult economic times. In addition, the results gave banks a green light to pay shareholders dividends and engage in share buybacks.

Other Market News

Q1 Gross Domestic Product Numbers Go Up: The Q1 GDP estimate improved to 1.4% on an annualized basis. Previous estimates were 1.2% and 0.7%. Consumer spending was also revised upward to 1.1% from previous estimates of 0.6% and 0.3%.

Durable Goods Orders Fall: Weakening commercial aircraft sales contributed to a 1.1% fall in May's durable goods orders. Core capital goods also fell 0.2%, surprising vs. expectations of a 0.5% increase.

Consumer Confidence and Sentiment Rise: Consumer confidence exceeded expectations by 2 points in June as individuals who reported that jobs are difficult to find fell by 0.3%. The Consumer Sentiment Index rebounded in the second half of June to 95.1, but remains less than May's 97.1 reading.

Pending Home Sales Weaken: Despite an expected 0.5% gain, pending home sales dropped 0.8% in May. The 3-month run of slowing sales suggests a weakening housing sector.

Home Price Index Softens: The Home Price Index fell from an annual increase of 5.9% to 5.7% year-over-year. This index reflects monthly changes in housing prices over 20 metropolitan regions. San Francisco, Boston, and Cleveland all reported lower housing price data.

Oil Prices Climb: Although oil prices ended last Friday at $46.04 a barrel, oil closed the first-half of the year down 14%, its weakest performance since 1998.Ongoing concerns about an oversupplied market continue to influence investors despite a dip in U.S. production slowing the bearish outlook.

Import/Export Data Modestly Brightens: Imported goods dropped to $193 billion and exports improved to $127.1 billion in May. While the $65.9 billion difference remains significant, this quarter's goods gap is averaging $66.5 billion a month.

The Dollar Drops: Though marginally recovering on Friday, the U.S. dollar reported its largest quarterly decline in almost 7 years against other major currencies.

The Week Ahead

U.S. markets close on Tuesday for the July 4th holiday. During the shortened trading week, the markets will look at manufacturing indices, motor vehicle sales, and employment data reports. As the data become available, investors will focus on how Q2 numbers roll out and what might be developing for the rest of the year.

As you reflect on these data and the week ahead, feel free to contact us should questions arise. We are here to serve your complete financial goals and help you navigate your investing choices.

ECONOMIC CALENDAR

Monday: ISM Manufacturing Index, PMI Manufacturing Index, Motor Vehicle Sales, Construction Spending
Wednesday: Factory Orders
Thursday: ADP Employment Report, ISM Non-Mfg Index
Friday:Employment Situation

Notes: All index returns (except S&P 500) exclude reinvested dividends, and the 5- year and 10-year returns are annualized. The total returns for the S&P 500 assume reinvestment of dividends on the last day of the month. This may account for differences between the index returns published on Morningstar.com and the index returns published elsewhere. International performance is represented by the MSCI EAFE Index. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.

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* The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.

* The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.

* The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.

* The Dow Jones Corporate Bond Index is a 96-bond index designed to represent the market performance, on a total-return basis, of investment-grade bonds issued by leading U.S. companies. Bonds are equally weighted by maturity cell, industry sector, and the overall index.

* The S&P/Case-Shiller Home Price Indices are the leading measures of U.S. residential real estate prices, tracking changes in the value of residential real estate. The index is made up of measures of real estate prices in 20 cities and weighted to produce the index.

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http://www.reuters.com/article/us-usa-stock-volatility-idUSKBN19L2VT

https://finance.yahoo.com/news/even-tech-stocks-are

https://www.bloomberg.com/news/articles/2017-06-29/asia-primed-for-heavy...

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http://www.cnbc.com/2017/06/30/europe-markets-ftse-cac-dax-central-banks...

http://www.cnbc.com/2017/06/29/asia-markets-lower-dollar-central-banks-i...

http://www.cnbc.com/2017/06/28/for-first-time-since-financial-crisis-fed...

http://www.cnbc.com/2017/06/28/citi-doubles-dividend-bank-shares-jump-af...

http://wsj-us.econoday.com/byshoweventfull.asp?fid=477652&cust=wsj-us&ye...

http://wsj-us.econoday.com/byshoweventfull.asp?fid=477408&cust=wsj-us&ye...

http://wsj-us.econoday.com/byshoweventfull.asp?fid=477925&cust=wsj-us&ye...