Market Update: Tuesday, December 12, 2017

MarketUpdate_header

Market Recap

  • Domestic indexes finished mostly higher ahead of busy macro front. S&P 500 Index +0.3%, Dow +0.2%, Nasdaq +0.5%.
  • Telecommunications led, technology strength continued, energy up on continued WTI crude oil rise; financials, industrials lagged.
  • Positive breadth on NYSE (1.2:1), Nasdaq negative (1.3:1); below-average volume (~93% of 30-day avg.).
  • 10-year Treasury yields higher; +1 basis point (0.01%) to 2.39%.
  • Commodities: Oil +1.2% to $58.02/bbl., COMEX gold -0.3% to $1244/oz., industrial metals mixed.
  • Economic data: Data lull ahead of two-day Federal Reserve (Fed) meeting; tax reform still in focus though no recent newsworthy developments.

Overnight & This Morning

  • U.S. indexes open slightly higher as markets await central bank news.
  • European indexes broadly higher midday; follows positive U.K. inflation data. STOXX Europe 600 +0.4%, DAX +0.2%, CAC 40 +0.5%.
  • Asian markets lower; soft Chinese inflation data weighed, though money supply and lending data better than expected. Nikkei -0.3%, Hang Seng -0.6%, Shanghai Composite -1.3%.
  • Treasuries holding steady. 10-yr. note yielding 2.39%.
  • Commodities: Oil pushing higher (+0.6% to $58.35/bbl.), gold flat at $1244/oz., industrial metals remain mixed.
  • Economic data: Domestic Producer Price Index (PPI) numbers came in slightly above expectations (+0.4% month over month vs. expectations of +0.3%).

MacroView_header

Macro Notes

  • Busy week for central banks. The Fed’s two-day meeting begins today with an interest rate decision set to be made tomorrow at 2 p.m. We expect a rate hike, though markets have largely priced this in, so the economic projections, dot plots, and post-meeting press conference may be the bigger focus for investors. While, the European Central Bank (ECB) and Bank of England will also offer statements at the end of their respective monetary policy meetings on Thursday, December 14, we don’t expect any new policy announcements. However, the ECB will release updated economic projections, which could have an impact on markets. We discuss these meetings in more detail in this week’s Bond Market Perspectives, due out later today.
  • 10-year Treasury remains in recent range…again. The 10-year Treasury yield has traded within a range of just under 0.1% over the past 30 trading days. The last time we’ve seen such a tight range was in late February 1974. The range was definitely more impressive at that point given that the 10-year was yielding around 7%, but the range we are seeing today is historically tight nonetheless.
  • Surprise, Surprise, Surprise! Economic surprise indexes from Bloomberg and Citigroup both hit multiyear highs in November, confirming a broad picture of growing economic momentum. In this week’s Weekly Economic Commentary, we look at what drove the numbers and what it might mean for the economy as we head into 2018.

MonitoringWeek_header

Click Here for our detailed Weekly Economic Calendar

Tuesday

  • National Federation of Independent Business Small Business Optimism (Nov)
  • PPI (Nov)
  • Monthly Budget Statement (Nov)
  • UK: CPI & PPI (Nov)
  • Germany: ZEW Survey (Dec)
  • Eurozone: ZEW Survey (Dec)
  • Russia: GDP (Q3)
  • BOJ: Outright Bond Purchase
  • Japan: Core Machine Orders (Oct)

Wednesday

  • MBA Mortgage Applications (Dec 8)
  • CPI (Nov)
  • Core CPI (Nov)
  • Real Avg Weekly & Hourly Earnings (Nov)
  • FOMC Rate Decision
  • Yellen (Dove)
  • Germany: CPI (Nov)
  • Germany: Wholesale Price Index (Nov)
  • Italy: Industrial Production (Oct)
  • UK: Jobless Claims Change (Nov)
  • Eurozone: Industrial Production (Oct)
  • Eurozone: Employment (Q3)
  • Japan: Nikkei Japan Mfg PMI (Dec)
  • Japan: Industrial Production & Capacity Utilization (Oct)
  • China: Retail Sales (Nov)
  • China: Industrial Production (Nov)

Thursday

  • Weekly Jobless Claims (Dec 9)
  • Import & Export Price Indexes (Nov)
  • Retail Sales (Nov)
  • Markit Mfg & Svs PMI (Dec)
  • Business Inventories (Oct)
  • France: CPI (Nov)
  • France: Markit France Mfg PMI (Dec)
  • Germany: Markit Germany Mfg & Svs PMI (Dec)
  • Italy: CPI (Nov)
  • Eurozone: Markit Eurozone Mfg & Svs PMI (Dec)
  • UK: Retail Sales (Nov)
  • BOE: Bank Rate
  • ECB: Main Refinancing Rate
  • ECB: Draghi
  • Bank of Canada: Poloz
  • Bank of Mexico: Overnight Rate
  • Japan: Tankan Survey (Q4)
  • China: Foreign Direct Investment (Nov)

Friday

  • Empire Manufacturing Index (Dec)
  • Industrial Production & Capacity Utilization (Nov)
  • Manufacturing Production (Nov)
  • Total Net Treasury Int’l Capital Flows (Oct)
  • Eurozone: Trade Balance (Oct)
  • ECB: Nowotny
  • Bank of Russia: Key Rate

Past performance is no guarantee of future results.

The economic forecasts set forth in the presentation may not develop as predicted.

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

Stock investing involves risk including loss of principal.

Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, political risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks.

Because of its narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.

Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments.

Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.

Investing in foreign and emerging markets debt securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical and regulatory risk, and risk associated with varying settlement standards.

Currency risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged.

This research material has been prepared by LPL Financial LLC.

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.

Not FDIC/NCUA Insured | Not Bank/Credit Union Guaranteed | May Lose Value | Not Guaranteed by any Government Agency | Not a Bank/Credit Union Deposit

Securities and Advisory services offered through LPL Financial LLC, a Registered Investment Advisor

Member FINRA/SIPC
Tracking # 1-676776

Can 2017 Go 12 for 12?

2017 could be one of the least volatile years ever for equities, along with being a solid year for the bulls. In addition, we could also be looking at the first year in U.S. stock market history to see every month of the calendar year close higher.

“The S&P 500 Index has had monthly win streaks that lasted a full 12 months, but never in history have all 12 months of a calendar year been positive on a total return basis. And with only a few weeks to go, should December finish in the green, we could be looking at yet another amazing record going down at the hands of 2017,” per Ryan Detrick, Senior Market Strategist.

1958, 1995, and 2006 were “close but no cigar” years, with each having 11 months in the green; while 1974 holds the record for futility with only one month in positive territory. The good news is that years following those with 11 higher months have never been lower, and average annual returns have been an impressive 10.8%. For more on monthly win streaks, be sure to watch this interview on CNBC with LPL Research.

IMPORTANT DISCLOSURES

The economic forecasts set forth in the presentation may not develop as predicted.

The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market.

Indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. Past performance is no guarantee of future results.

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security.

This research material has been prepared by LPL Financial LLC.

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.

Not FDIC/NCUA Insured | Not Bank/Credit Union Guaranteed | May Lose Value | Not Guaranteed by any Government Agency | Not a Bank/Credit Union Deposit

Securities and Advisory services offered through LPL Financial LLC, a Registered Investment Advisor

Member FINRA/SIPC

Tracking #1-676340 (Exp. 12/18)

Market Update: Monday, December 11, 2017

MarketUpdate_header

Market Recap

  • Stocks advanced Friday on jobs report, stopgap bill agreement, Brexit progress; bringing S&P 500 Index (+0.5%), Nasdaq (+1.0%), Dow (+0.2%) into positive territory on the week. On the day: S&P 500 (+0.6%), Nasdaq (+0.4%), Dow (+0.5%).
  • Broad-based sector gains as telecommunications, healthcare led; technology lagged but still advanced.
  • Positive breadth on NYSE (1.5:1), Nasdaq (1.3:1) amid light volume (~88% of 3-day avg.).
  • Treasury yield curve steepened; 10-yr. yield +1 basis point (+0.01%) to 2.38%.
  • Commodities: WTI crude oil +1.1% to $57.33/bbl., COMEX gold -0.3% to $1250/oz., industrial metals mixed but notably lower on the week.
  • Economic data: Nonfarm payrolls +228k vs. +195k expected, wage growth still lagging, unemployment rate static at 4.1%; stopgap bill funds gov’t until Dec. 22, Brexit progress enabled negotiations to move on to trade topics.

Overnight & This Morning

  • S&P 500 little changed after paring slight gains on reports of an explosion at a midtown Manhattan subway station.
  • European equity markets little changed overall, except for the U.K. FTSE (+0.5%).
  • Asian markets broadly higher overnight. Japan’s Nikkei +0.6% to a 26-year high, Shanghai Composite +1.0%, Hang Seng +1.1%.
  • Fixed income: 10-yr. yield down one basis point (0.01%) at 2.36%.
  • Commodities: WTI crude +0.3% to $57.53/bbl., copper unchanged, gold little changed to $1249/oz.; U.S. dollar -0.1%.
  • Economic calendar today includes job openings and labor turnover.
  • Bitcoin futures began trading on the CBOE.

MacroView_header

Macro Notes

  • The week ahead dominated by central banks. Central banks will dominate the news cycle this week, although the Federal Reserve is not expected to offer any surprises with a quarter point interest rate hike virtually fully priced in at Wednesday’s meeting; Chair Janet Yellen will deliver her last formal press conference. The European Central Bank (ECB) and Bank of England will meet on Thursday. The ECB may provide more details on its tapering plans. This week’s U.S. data calendar includes small business optimism, job openings and labor turnover, consumer and producer inflation, retail sales, and industrial production. Overseas data highlights include money supply and loan growth, retail sales and industrial production for China, and a plethora of manufacturing, inflation, and sentiment data in Japan.
  • Companies remained generally upbeat during third quarter earnings season, based on the Corporate Beige Book Barometer. As discussed in our latest Weekly Market Commentary, due out later today, the positive tone from management teams appears to support a positive near-term earnings outlook even without factoring the potential benefits from tax reform. Hurricane impacts were widespread, with the word “hurricane” mentioned at least once during the earnings conference calls of 298 S&P 500 companies, according to FactSet.
  • Another amazing streak. The S&P 500 has officially gone 52 consecutive weeks without a 2% weekly change higher or lower. This is only the second time in history it has gone a full year without a 2% weekly change. The longest streak ever was 79 consecutive weeks without a 2% change in the mid-’60s.
  • Can the S&P 500 go 12 for 12? Incredibly, the S&P 500 has been up on a total return basis all 11 months so far this year. There have been streaks of 12 consecutively higher months before, but never have all 12 months of one calendar year been higher. Today on the LPL Research blog we will take a closer look at this rare phenomena.

MonitoringWeek_header

Click Here for our detailed Weekly Economic Calendar

Monday

  • Jolts Job Openings (Oct)
  • Italy: Retail Sales (Oct)
  • Germany: First Quarter Manpower Employment Outlook
  • Turkey: GDP (Q3)
  • ECB: Nowotny
  • Bank of Italy: Monthly Report “Money & Banks”
  • Japan: Machine Tool Orders (Nov)
  • China: Manpower Survey (Q1)
  • Japan: PPI (Nov)
  • Japan: Tertiary Industry Index (Oct)

Tuesday

  • National Federation of Independent Business Small Business Optimism (Nov)
  • PPI (Nov)
  • Monthly Budget Statement (Nov)
  • UK: CPI & PPI (Nov)
  • Germany: ZEW Survey (Dec)
  • Eurozone: ZEW Survey (DEC)
  • Russia: GDP (Q3)
  • BOJ: Outright Bond Purchase
  • Japan: Core Machine Orders (Oct)

Wednesday

  • MBA Mortgage Applications (Dec 8)
  • CPI (Nov)
  • Core CPI (Nov)
  • Real Avg Weekly & Hourly Earnings (Nov)
  • FOMC Rate Decision
  • Yellen (Dove)
  • Germany: CPI (Nov)
  • Germany: Wholesale Price Index (Nov)
  • Italy: Industrial Production (Oct)
  • UK: Jobless Claims Change (Nov)
  • Eurozone: Industrial Production (Oct)
  • Eurozone: Employment (Q3)
  • Japan: Nikkei Japan Mfg PMI (Dec)
  • Japan: Industrial Production & Capacity Utilization (Oct)
  • China: Retail Sales (Nov)
  • China: Industrial Production (Nov)

Thursday

  • Weekly Jobless Claims (Dec 9)
  • Import & Export Price Indexes (Nov)
  • Retail Sales (Nov)
  • Markit Mfg & Svs PMI (Dec)
  • Business Inventories (Oct)
  • France: CPI (Nov)
  • France: Markit France Mfg PMI (Dec)
  • Germany: Markit Germany Mfg & Svs PMI (Dec)
  • Italy: CPI (Nov)
  • Eurozone: Markit Eurozone Mfg & Svs PMI (Dec)
  • UK: Retail Sales (Nov)
  • BOE: Bank Rate
  • ECB: Main Refinancing Rate
  • ECB: Draghi
  • Bank of Canada: Poloz
  • Bank of Mexico: Overnight Rate
  • Japan: Tankan Survey (Q4)
  • China: Foreign Direct Investment (Nov)

Friday

  • Empire Manufacturing Index (Dec)
  • Industrial Production & Capacity Utilization (Nov)
  • Manufacturing Production (Nov)
  • Total Net Treasury Int’l Capital Flows (Oct)
  • Eurozone: Trade Balance (Oct)
  • ECB: Nowotny
  • Bank of Russia: Key Rate

Past performance is no guarantee of future results.

The economic forecasts set forth in the presentation may not develop as predicted.

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

Stock investing involves risk including loss of principal.

Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, political risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks.

Because of its narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.

Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments.

Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.

Investing in foreign and emerging markets debt securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical and regulatory risk, and risk associated with varying settlement standards.

Currency risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged.

This research material has been prepared by LPL Financial LLC.

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.

Not FDIC/NCUA Insured | Not Bank/Credit Union Guaranteed | May Lose Value | Not Guaranteed by any Government Agency | Not a Bank/Credit Union Deposit

Securities and Advisory services offered through LPL Financial LLC, a Registered Investment Advisor

Member FINRA/SIPC
Tracking # 1-676315