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    Markets "In a Nutshell" for April 18, 2018

    Apr 17, 2018

    Investment Week at a Glance

    Stocks finished higher for the week. The Dow Jones Industrial Average was up 1.79%, the S&P 500 rose 1.99%, the New York Stock Exchange Composite (2,000 stocks) was up 2.77% and the average investors index (Value Line Index) was up 1.75%.  Foreign stocks (DJ Global ex U.S.) were up 1.23%.  Bond prices were lower for the week, pushing the yield on the 10-year U.S. Treasury up 5 basis point to finish the week at 2.82%.  (Data sources: Barron’s Financial, Wall Street Journal)

     

    Global Stocks Rise for the Week

    Economic data coming out of the U.S. last week was disappointing. Initial jobless claims were higher than expected, while we saw lower-than-expected results from the University of Michigan’s consumer sentiment index, the consumer price index and wholesale inventories. Overseas economies also struggled, with retail sales in Brazil, CPI in China, and industrial production in the UK and France all disappointing. One bright spot: Economic data from Japan was better than expected, with higher core machine orders and producer prices.

    Equities posted gains for the week, with U.S. energy stocks outperforming on expectations for strong first-quarter earnings. Technology stocks also outperformed in anticipation of strong earnings results. However, interest-rate-sensitive sectors (such as utilities and REITs) underperformed as interest rates rose during the week.

    Internationally, resource-focused sectors like energy and materials outperformed due to strength in commodity prices. European equities also outperformed, continuing their recent trend as investors seek a relative safe haven from the U.S./China trade dispute. But Japanese equities underperformed, as investors worried about potential fallout from the trade tensions between the U.S. and China.

     

    Bond Yields Rise

    Bond yields across the curve rose last week, pushing bond prices lower, as investors took a more risk-on positioning. The return spread between global stocks and broad-based bonds was more than 2% for the week, in stocks’ favor. On a trailing one-year basis, that spread is currently more than 17%—even in the wake of the elevated equity volatility recently.

    Inflation data, as measured by the Consumer Price Index, was slightly weaker than economists’ expectations. However, the rate of increase in the CPI was higher than it has been in recent months—at 2.4% on a year-over-year basis. Meanwhile, core CPI (which ignores the volatile food and energy segments of the index) hit a 13-month high of 2.1%—in line with expectations. Although the CPI is an important inflation gauge, remember that the Fed’s preferred inflation measure is the PCE—which rose by just 1.6% (year-over-year) in February.

     

    Quiz:

    If an individual reached age 70 on Jan. 31, 2018, what is the deadline for them to take their first required minimum distribution from their traditional IRA?

    a)   December 31, 2018

    b)   October 15, 2018

    c)   April 1, 2019

    d)   January 1, 2019

     

    Have a good week!

     

     

     

     

    Answer to quiz:

    c)   The required begin date according to the Internal Revenue Service, for your first RMD for IRAs (including SEP and Simple IRAs) is April 1 of the year following the calendar year in which you reach age 70½. The required begin date for 401(k), profit-sharing, 403(b) or other defined-contribution and pension plans is, generally, April 1 following the later of the calendar year in which you reach age 70½, or retire.