Market Update: Wednesday, July 20, 2016


  • 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)

Click Here for our detailed Weekly Economic Calendar

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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.

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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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