Markets "In a Nutshell" for July 31, 2018Jul 31, 2018
Investment Week at a Glance
Stocks finished mostly higher for the week. The Dow Jones Industrial Average was up 1.57%, the S&P 500 rose 0.61%, the New York Stock Exchange Composite (2,000 stocks) was up 1.03% and the average investors index (Value Line Index) was down 0.70%. Foreign stocks (DJ Global ex U.S.) were up 1.48%. Bond prices were lower for the week, pushing the yield on the 10-year U.S. Treasury up 6 basis point to finish the week at 2.96%. (Data sources: Barron’s Financial, Wall Street Journal)
Economic Growth Heating Up
Second quarter GDP grew at an annual rate of 4.1%, according to advance estimates. Growth was far better than the first quarters pace of 2.2% , although still below second quarter forecasts of 4.2%. It registered as the fastest quarterly rate of economic growth since the 4.9% expansion we saw in the third quarter of 2014. Much of this added growth can be attributed to a combination of strong personal consumption expenditures, jumping to 4% in the second quarter versus only 0.5% in the first, and substantial private investment growth in equipment, structures, and intellectual property.
Something interesting to note: looking back at the instances of 4%+ GDP growth occurring within this expansion, the stock market, on average, gained approximately 9.5% over the next 12 months.
Facebook Loses $120 Billion in Market Value
Last week Facebook suffered a dramatic drop in price in after-hours trading that resulted in an approximate 19% fall by the time all was said and done. This drop of nearly $120 billion in market value was among the greatest loses in market history. The decline was primarily due to news of Facebook’s revenue growth being slower than expected in addition to a leveling in growth of users in key markets. There is also concern that rising expenses due to privacy concerns could further reduce profit margins in the coming periods.
Despite the loss, the stock price only returned to levels reach in April of this year. Facebooks still remains the fifth most value company on earth.
What percentage of workers begin receiving Social Security benefits as soon as they are eligible at age 62?
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