Sometimes, high earners accumulate substantial cash reserves in addition to significant retirement savings accounts. With interest rates still near historic lows and many bank accounts yielding next to nothing, some of that cash might be better off invested.
A SURGE IN CONSUMER OPTIMISM
The Conference Board’s consumer confidence index continued to climb in December. Analysts polled by MarketWatch projected a reading of 110.0 for the gauge, but it beat that forecast, rising 4.3 points to a 15-year peak of 113.7. The major factor in the gain? Growing expectations of a better economy, particularly among older Americans. The CB’s monthly expectations index reached a high unseen since December 2003.1,2
PENDING HOME SALES SLIP
Housing contract activity declined 2.5% in November, according to the latest research from the National Association of Realtors. In October, pending sales were up by just 0.1%.1
YEARLY HOME PRICE GAINS INCREASE
October’s S&P/Case-Shiller national home price index came out last week, showing a 5.6% annualized improvement. In its September edition, the 12-month advance was 5.4%. The 20-city composite version of the index rose 5.1% in the year ending in October.1,2
A BULLISH YEAR COMES TO A CLOSE
Stocks descended during the last trading week of 2016. The S&P 500 gave back 1.10% of its winter gains to end the year at 2,238.83. Blue chips held up better, as the Dow Jones Industrial Average fell just 0.86% for the week to 19,762.60. Meanwhile, the Nasdaq Composite slumped 1.46% for the week, closing Friday at 5,383.12. For the year, the Dow gained 13.42%; the Nasdaq, 7.50%; the S&P 500, 9.54%; and the Russell 2000, 19.48%. The CBOE VIX lost 22.95%. A barrel of light sweet crude was worth $53.72 on the NYMEX as Wall Street’s trading week ended. WTI crude rose 45% in 2016 to have its best year since 2009.3,4
Wall Street takes Monday off to observe the New Year’s Day holiday. Trading resumes Tuesday, with the December ISM manufacturing PMI being the big news item. Wednesday, minutes from the December Federal Reserve policy meeting arrive, plus the December ADP payrolls report and Q4 results from Sonic. Thursday offers the December ISM services PMI, the latest initial jobless claims numbers, the December Challenger job-cut report, and earnings from Constellation Brands, Container Store, Monsanto, PriceSmart, Ruby Tuesday, and Walgreens Boots Alliance. The Department of Labor’s December jobs report comes out Friday, along with data on November factory orders.
Sources: wsj.com, bigcharts.com, treasury.gov – 12/30/163,5,6,7
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.
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This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.
1 – marketwatch.com/economy-politics/calendars/economic [12/30/16]
2 – nytimes.com/2016/12/27/business/trump-consumer-confidence-index-real-estate-home-prices-on-the-rise.html [12/27/16]
3 – markets.wsj.com/us [12/30/16]
4 – thestreet.com/story/13939313/1/dow-s-amp-p-500-and-nasdaq-close-out-2016-with-strong-gains.html [12/30/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=12%2F30%2F15&x=0&y=0 [12/30/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=12%2F30%2F15&x=0&y=0 [12/30/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=12%2F30%2F15&x=0&y=0 [12/30/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=12%2F30%2F11&x=0&y=0 [12/30/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=12%2F30%2F11&x=0&y=0 [12/30/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=12%2F30%2F11&x=0&y=0 [12/30/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=12%2F29%2F06&x=0&y=0 [12/30/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=12%2F29%2F06&x=0&y=0 [12/30/16]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=12%2F29%2F06&x=0&y=0 [12/30/16]
6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [12/30/16]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [12/30/16]
Topics: Weekly Economic Update