Market Commentary, 06/05/17
Last week stocks rallied for a second week as all three of the major US benchmarks reached new highs. Gains were broad-based as the Dow Jones Industrial Average gained 126 points to close at 21,206, an increase of 0.6% and a new record high. The S&P 500 managed a gain of 0.96% to also reach a new record close of 2,439. The Nasdaq Composite rallied 1.54%, to close at a new record, 6,305.
The continuation of the so called “Trump Rally” is likely due to recent positive US Economic news for the month of May…
1. The Labor Department reported that the U.S. added 253,000 new jobs in May, more than the expected 185,000.
2. The unemployment rate fell to 4.3%, touching its lowest level since 2001.
3. Initial jobless claims rose by 13,000 for the week ended May 27, which was less than projected.
4. Continuing jobless claims, the number of people already receiving benefits, fell by 9,000 to 1.92 million.
5. Continuing jobless claims have remained under 2 million for seven consecutive weeks. That last occurred in 1973-74.
6. The ongoing increase in home prices picked up speed last month, accelerating to its highest rate in nearly three years.
7. Inflation, as measured by the Personal Consumption Expenditures Index (1), was +0.2% in April, reversing March’s 0.2% drop.
8. Even with the low inflation, the Fed is still expected to raise interest rates possibly as early as next week.
As a sign of the times, this week online retailer Amazon closed above $1,000/share for the first time in its history as Americans continue to become accustomed to the convenience of shopping at home and having a package show up at their door two days later. More than a few people have described the experience as a “Christmas every day” phenomenon where boxes filled with items they forgot they ordered appear on their doorsteps day after day. Amidst this new shopping experience, brick-and-mortar store chains have sunk into bankruptcy as consumers no longer walk their aisles.
The market reaching all-time highs and the continued strong economic data coupled with President Trump and his Administration’s pro-growth agenda bodes well for continued market appreciation.
Wayne Copelin, CFP®
President, Copelin Financial Advisors, Inc.
514 Brooks Street
Sugar Land, TX 77478
Phone (281) 240-2902
Fax: (281) 240-2856
Securities offered through ProEquities, Inc., a Registered Broker-Dealer and Member FINRA & SIPC Advisory Services offered through Harvest Investment Services, LLC., a Registered Investment Advisor Copelin Financial Advisors, Inc and Harvest Investment Services, LLC are independent of ProEquities, Inc.
(1) There are two common measures of inflation in the US today: the Consumer Price Index (CPI) released by the Bureau of Labor Statistics and the Personal Consumption Expenditures price index (PCE) issued by the Bureau of Economic Analysis. The CPI gets more press because it is used to adjust social security payments, but the Fed prefers the PCE, which is the reason for its use here. Both are determined by the increase in the price of a basket of goods, but the CPI is based on a survey of what households are buying and the PCE is based on what business say they are selling.