Market Update: Thursday, March 30, 2017

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  • Stocks flat despite upbeat GDP data. (9:58am ET) Equity markets are largely unchanged this morning as traders weigh an upward revision to Q4 gross domestic product (GDP) alongside a policy spotlight shift to proposed infrastructure spending and tax reform. Yesterday, the S&P 500 (+0.1%) closed slightly higher, in large part due to the energy sector (+1.2%), which climbed along with oil prices. Other sector moves were muted, with the largest coming from consumer discretionary (+0.6%), financials (-0.5%), and utilities (-0.4%).  Overseas, Asian markets dipped (Shanghai Composite -1.0%, Nikkei -0.8%, Hang Seng -0.4%) as the People’s Bank of China tightens liquidity in the banking system. In Europe, stocks are higher (STOXX 600 +0.2%) on oil company gains.  Elsewhere, COMEX gold ($1248/oz.) is off 0.4%, WTI crude oil ($49.80/barrel) continues to rebound, and the yield on the 10-year Treasury note is flat at 2.39%.

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  • Third estimate of Q4 GDP edges higher. Real GDP growth for the fourth quarter of 2016 was revised slightly higher in the most recent estimate from 1.9% to 2.1%. The upward revision was mainly driven by a better picture of consumer spending. The first estimate of GDP for the first quarter of 2017 will be released on April 28, with expectations tracking to another quarter of near 2% growth. Looking out to the rest of the year, rising business and consumer confidence based on prospects of growth-friendly policy may help push GDP growth to near 2.5% for all of 2017.
  • Weekly jobless claims see slight drop. Data released this morning on initial claims for unemployment insurance for the week ending March 24 showed a decrease of 3,000 from the prior week’s revised 261,000, yet still exceeded consensus expectations of 247,000, making this the fourth straight week data came in higher than expected. Still, claims remain comfortably below 300,000, which is generally associated with a healthy labor market.

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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.

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) 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.

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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