- Earnings still in focus as markets look to resume advance. After several days of little movement, stocks opened green, boosted by strong earnings reports, including from tech bellwether Microsoft. Tuesday’s trading finished mixed and largely unchanged with the Dow gaining 0.1% and the S&P 500 losing 0.1%, dragged down by weakness in materials and energy. European equities are advancing today as investors look ahead to Thursday’s European Central Bank (ECB) meeting, while in Asia, both the Nikkei Index and Shanghai Composite shed 0.3% on little news. Elsewhere, WTI crude oil is dipping on mixed inventory reports, COMEX gold is off over 1%, and the yield on the 10-year Treasury note is up several basis points to 1.59%.
- U.K. data have started to come in, both economic and earnings. The U.K. released employment data for May: the job market seems strong, with unemployment now below 5%, the lowest figure since 2005. Average weekly earnings also increased. However, this data were all pre-Brexit; therefore, it could be reversed, and should be taken with a grain of salt. Though the overall economy throughout Europe has been weak, the U.K. has been one of the region’s stronger economies.
- Strong rally continues. The Dow Jones Industrials Average is up eight days in a row for the first time since March 2013, and has made six new highs in a row for the first time since December 2013. Also notable is the continued drop in the VIX, a measure of implied stock market volatility, which has dipped below 12 to its lowest level in 11 months and near bull market lows. Though there is evidence that stocks are technically overbought in the short term, this market continues to exhibit strong momentum and healthy breadth and, as a result, pullbacks may be more likely to be bought.
- Markit PMI Mfg. (Jul)
- Eurozone: Markit Mfg. PMI (Jul)
- G-20 Finance Ministers Meeting in China
- Japan: Imports and Exports (Jun)
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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.
Treasury inflation-protected securities (TIPS) help eliminate inflation risk to your portfolio, as the principal is adjusted semiannually for inflation based on the Consumer Price Index (CPI)—while providing a real rate of return guaranteed by the U.S. government. However, a few things you need to be aware of is that the CPI might not accurately match the general inflation rate; so the principal balance on TIPS may not keep pace with the actual rate of inflation. The real interest yields on TIPS may rise, especially if there is a sharp spike in interest rates. If so, the rate of return on TIPS could lag behind other types of inflation-protected securities, like floating rate notes and T-bills. TIPs do not pay the inflation-adjusted balance until maturity, and the accrued principal on TIPS could decline, if there is deflation.
Bank loans are loans issued by below investment-grade companies for short-term funding purposes with higher yield than short-term debt and involve risk.
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.
High-yield/junk bonds are not investment-grade securities, involve substantial risks, and generally should be part of the diversified portfolio of sophisticated investors.
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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.
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