Market Update: Friday, February 24, 2017

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  • U.S. stocks retreat, dollar weighs overseas. (10:22am ET) Domestic indexes are pulling back this morning after the Dow posted its tenth straight record close on Thursday, a feat not seen since 1987; the S&P 500 eked out a marginal gain. Weakness came from the industrials (-0.7%) and consumer discretionary (-0.7%) sectors, though a pullback in rates helped utilities (+1.1%) and telecom (+1.0%) stocks move higher. Overseas, Asian markets traded mostly lower overnight following dollar weakness stemming from the FOMC meeting minutes, which some interpreted as relatively dovish and a potential threat to export demand. The dollar is also playing a role in European trading as commodity-related sectors weigh on the STOXX Europe 600, which is down more than 0.9%. Elsewhere, WTI crude oil ($54.17/barrel) is down ahead of U.S. rig count data, COMEX gold ($1256/oz.) is eyeing its fourth straight weekly advance, and Treasury yields are off three basis points (0.03%) to 2.34%.

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  • Busy start to a very busy month. Next week is an incredibly busy week for economic data and events around the globe. In the U.S., President Trump will address a joint session of Congress on Tuesday night, and Fed Chair Yellen and Vice Chair Fischer will deliver speeches on Friday. In addition, there are a half a dozen other FOMC members on the docket next week, and the Fed will also release its Beige Book ahead of the March 14-15, 2017 meeting. In addition to that, data for January and February on durable goods, ISM (manufacturing and non manufacturing), vehicle sales, and pending home sales are due out. Overseas, the U.K.’s House of Lords will begin debate on Article 50 (aka Brexit), China will release key data in manufacturing and service sector activity, and in Europe, February data on CPI and bank lending for January will be closely watched.
  • 10 in a row for the Dow. The Dow closed higher for the tenth consecutive day yesterday, for the first time since March 2013. It hasn’t been up 11 days in a row since early 1992. Going back to 1900, this was the fifteenth time the Dow closed green 10 days in a row. The previous two times, November 1996 and March 2013, it was up another 19.3% and 10.5% a year later, respectively. It is also worth noting the Dow has made a new all-time high for 10 consecutive days, the longest streak since 12 in a row in January 1987. Today, on the LPL Research blog we will take a closer look at long Dow win streaks and what could happen next.

 

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Important Disclosures

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.

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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) are subject to interest rate risk and opportunity risk. If interest rates rise, the value of your bond on the secondary market will likely fall. In periods of no or low inflation, other investments, including other Treasury bonds, may perform better.

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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.

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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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