Your Weekly Update – Bulls Charge into the New Year

Weekly Performance
US: S&P 500 Index +2.6%, Dow +2.3%, Nasdaq +3.4%

Europe: STOXX Europe 600 +2.1%, German DAX +3.1%, France CAC 40 +1.6%, U.K. FTSE 100 +0.1%
Asia: Japan Nikkei +3.3%, China Shanghai Composite +2.6%, Korea KOSPI +1.2%
10-Yr. Treasury yield: +1 basis point to 2.47%, WTI crude oil +2.0%, COMEX gold +0.8%

Market bulls led the charge into 2018 as major indexes rallied, with the Dow racing above the 25,000 milestone for the first time in history. Manufacturing and services sector data painted an upbeat picture of the global economy, while the release of last month’s Federal Reserve meeting minutes indicated that most participants maintain a preference for a go-slow approach in the central bank’s ongoing interest-rate hiking campaign. Add to that yesterday’s closely-watched nonfarm payrolls report that showed a modest uptick in wage growth and better-than-expected gains in manufacturing jobs, and the result was a rally in commodity prices, interest rates, and equities.

European equities stumbled on the first trading day of the year following a spate of somewhat lackluster manufacturing figures and little else to trade on. Markets quickly regained their footing though –buoyed by strength in the U.S.-to finish off the week with respectable gains. Meanwhile, positive economic data out of China to start the week gave regional indexes a boost, and apparent easing of political tensions between North and South Korea aided sentiment after North Korean leader Kim Jong Un gave indications he is open to dialogue with South ahead of next month’s winter Olympics to be held in the Seoul.

Next week’s U.S. economic docket includes the NFIB Small Business Optimism Index, wholesale inventories, and inflation data, as well as a series of Fed speakers throughout the week. Overseas, European investors will get inflation and industrial production readings across the region; while Japan releases its Leading Economic Index, and China disseminates consumer and producer inflation, as well as loan growth, money supply, and trade data.

Investing involves risk, including possible loss of principal.

Indices 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.

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.

The S&P 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.

The Dow Jones Industrial Average (DJIA) Index is comprised of U.S.-listed stocks of companies that produce other (nontransportation and nonutility) goods and services. The Dow Jones Industrial Averages are maintained by editors of The Wall Street Journal. While the stock selection process is somewhat subjective, a stock typically is added only if the company has an excellent reputation, demonstrates sustained growth, is of interest to a large number of investors, and accurately represents the market sectors covered by the average. The Dow Jones averages are unique in that they are price weighted; therefore, their component weightings are affected only by changes in the stocks’ prices.

The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S.-based common stocks listed on the NASDAQ stock market. The index is market-value weighted. This means that each company’s security affects the index in proportion to its market value. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. It is not possible to invest directly in an index.

The STOXX Europe 600 Index is derived from the STOXX Europe Total Market Index (TMI) and is a subset of the STOXX Global 1800 Index. With a fixed number of 600 components, the STOXX Europe 600 Index represents large, mid and small capitalization companies across 18 countries of the European region: Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom.

The Deutscher Aktien Index (DAX) is a stock index that represents 30 of the largest and most liquid German companies that trade on the Frankfurt Exchange.

The CAC 40 is a capitalization-weighted index of the 40 largest French equities designed to measure the overall performance of the Paris Bourse, the French stock exchange.

The FTSE 100 is an index of blue-chip stocks on the London Stock Exchange.

The Nikkei 225 Stock Average is a price-weighted index comprised of the top 225 blue-chip companies on the Tokyo Stock Exchange.

The Shanghai Stock Exchange Composite Index is a capitalization-weighted index. The index tracks the daily price performance of all A shares and B shares listedon the Shanghai Stock Exchange. The index was developed on December 19, 1990 with a base value of 100. Index trade volume on Q is scaled down by a factor of 1000.

The Korea Composite Stock Price Index or KOSPI is the index of all common stocks traded on the Stock Market Division—previously, Korea Stock Exchange—of the Korea Exchange.

Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments, and exports less imports that occur within a defined territory.

The Chicago Area Purchasing Manager’s Index is read on a monthly basis to gauge how manufacturing activity is performing. This index is a true snapshot of how manufacturing and corresponding businesses are performing for a given month. A reading of 50 or above is considered a positive reading. Anything below 50 is considered to indicate a decline in activity. Readings of the index have the ability to shift the day’s trading session one way or another based on the results.

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