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    Markets "In a Nutshell" for February 27, 2018

    Feb 27, 2018

    Investment Week at a Glance

    Stocks finished slightly higher for the week. The Dow Jones Industrial Average was up 0.36%, the S&P 500 rose 0.55%, the New York Stock Exchange Composite (2,000 stocks) was up 0.08% and the average investors index (Value Line Index) was up 0.11%. Foreign stocks (DJ Global ex U.S.) were up 0.12%. Bond prices were higher for the week, pushing the yield on the 10-year U.S. Treasury down 1 basis point to finish the week at 2.87%. (Data sources: Barron’s Financial, Wall Street Journal)


    Broader Market Remains Flat

    In the U.S., equities were essentially flat for the week. Materials stocks were the top performers, as steel companies benefited from the potential for import tariffs. The technology sector also outperformed in anticipation of further consolidation among semiconductor manufacturers. In contrast, shares of consumer staples companies underperformed following weak fourth-quarter earnings reports. Two interest rate-sensitive sectors, real estate and utilities, also underperformed as rates rose on concerns about the Fed potentially tightening its monetary policy.

    Plenty of positive news last week about the health of the U.S. economy. The most recent manufacturing PMI, leading economic index reading, and initial jobless claims were all better than expected. That said, existing home sales disappointed by falling sharply.

    In the fixed-income markets, corporate credits outperformed and international bonds underperformed while the U.S. dollar rallied.


    Mixed Economic Data Overseas

    Overseas, economic data was mixed. The all industry activity index in Japan came in ahead of expectations, as did retail sales in Russia. But European data was disappointing, with consumer confidence and manufacturing PMI worse than expected.

    Japanese equities outperformed as the yen finally weakened after months of strength. But emerging markets underperformed as investors reacted to the prospect of higher interest rates in the U.S. India, Taiwan and Indonesia performed particularly poorly among emerging markets.



    True or False: Roth 401(k) owners, just as traditional 401(k) owners, must take required minimum distributions?  Answer is below…


    Have a good week!





    Answer to quiz:

    True: the Roth 401(k), which is funded with after tax contributions, grow tax deferred, and qualified distributions are tax free – essentially the reverse pattern of a traditional 401(k). The RMD situation is similar: By law, account owners must start taking distributions in the year that they reach age 70½.

    However, for Roth 401(k)s, as well as traditional 401(k)s, RMDs can be deferred past age 70½ until retirement for those who are still employed by the employer that provides the 401(k) plan.