The first week of 2018 is behind us, and, across the globe, stocks experienced a strong start to the year. International stocks in the MSCI EAFE gained 2.44% last week.[1] In the U.S., our major indexes also leapt forward, hitting a number of records and milestones.[2] 

Domestic Index Performance for the First Week of 2018[3]

S&P 500:

  • Gained 2.60%
  • Hit 2,700 for the first time
  • Posted its largest weekly gain since December 2016

Dow:

  • Gained 2.33%
  • Hit 25,000 for the first time 
  • Had its best yearly start since 2006

NASDAQ:

  • Gained 3.38%
  • Hit 7,000 for the first time 
  • Posted its largest weekly gain since December 2016
  • Had its best yearly start since 2006

What drove markets last week?

A variety of factors affected the markets last week, from tax reform to commodity prices.[4] Interestingly, considering the indexes' positive performance, one of the biggest economic headlines seemed to provide negative data: The U.S. economy added fewer jobs than anticipated.[5] 

On the surface, this report may seem like bad news for the economy. The missed projection, however, is likely less of a big deal than it appears at first. While hiring was lower than expected, wages picked up and the unemployment rate remained at 4.1%, the lowest rate since 2000.[6] 

Ultimately, this jobs report may be positive news for the markets. It shows that the economy is still adding jobs but not at a blistering pace. As a result, slower job growth could keep the Federal Reserve from raising interest rates too aggressively. Cleveland Fed President Loretta Mester said she believes, "We're basically at maximum employment from the view of monetary policy." She anticipates 3 to 4 rate increases this year.[7] If the Fed continues with its gradual rate increases, this move could have a favorable affect on stocks.[8] 

As we move forward in 2018, we will continue monitoring a myriad of economic perspectives that may impact you, including any changes to monetary policy. For now, we are pleased to see the markets' positive start to the year and look forward to guiding you through whatever lies ahead. 

ECONOMIC CALENDAR

  • Tuesday: JOLTS
  • Thursday: Jobless Claims
  • Friday: Consumer Price Index, Retail Sales

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

Diversification does not guarantee profit nor is it guaranteed to protect assets.

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

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 indices from Europe, Australia and Southeast Asia. 

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.

The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

The Federal Reserve System (also known as the Federal Reserve and, informally, as the Fed) is the central banking system of the United States. The Federal Reserve System is composed of 12 regional Reserve banks which supervise state member banks. The Federal Reserve System controls the Federal Funds Rate (aka Fed Funds Rate), an important benchmark in financial markets used to influence the supply of money in the U.S. economy.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Past performance does not guarantee future results.

You cannot invest directly in an index.

Consult your financial professional before making any investment decision.

Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named Broker dealer or Investment Advisor, and should not be construed as investment advice. Neither the Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

[1] www.msci.com/end-of-day-data-search

[2] www.bloomberg.com/news/articles/2018-01-04/asia-stocks-poised-to-extend-torrid-start-to-2018-markets-wrap
[3] www.cnbc.com/2018/01/05/us-stock-futures-us-jobs-dow-politics-on-the-agenda.html

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=%21DJI®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO

[4] www.marketwatch.com/story/sp-eyes-another-historic-record-run-with-us-jobs-data-on-deck-2018-01-05
[5] www.bloomberg.com/news/articles/2018-01-04/asia-stocks-poised-to-extend-torrid-start-to-2018-markets-wrap
[6] www.bloomberg.com/news/articles/2018-01-05/u-s-adds-148-000-jobs-wages-rise-in-signs-of-full-employment
[7] www.marketwatch.com/story/sp-eyes-another-historic-record-run-with-us-jobs-data-on-deck-2018-01-05
[8] finance.yahoo.com/news/futures-trim-gains-december-jobs-134147154.html

[9] www.foodnetwork.com/recipes/food-network-kitchen/bacon-and-broccoli-rice-bowl-recipe-2120232 

[10] www.irs.gov/newsroom/participating-in-the-sharing-economy-can-affect-taxes