From domestic unrest to international terrorism, last week provided many headlines that could easily rattle the markets. While we did see days with volatility and declines, the major indexes remained relatively flat. For the week, the Dow was down 0.84%, the S&P 500 dropped 0.65%, and the NASDAQ fell 0.64%. On the international front, the MSCI EAFE remained virtually the same last week as the week before, recording a microscopic 0.0014% increase.
Why didn't the markets react to the geopolitical turmoil by turning sharply negative? As we've shared before: Headlines shouldn't drive long-term market behavior - economic fundamentals should. Last week, we received reports indicating the economy continues to be strong in a number of areas.
Here is a closer look at last week's important economic news:
- Robust Retail Sales: July retail sales rose 0.6%, beating expectations and showing strength in a variety of retail categories.
- Strong Business Inventories: Factory, warehouse, and retail business inventories all jumped for a combined 0.5% increase in June. The data looks promising - inventory levels tend to rise in positive economic environments.
- Uneven Industrial Activity: Industrial production rose 0.2% in July. This growth was lower than expected due to declining motor vehicle production dragging on the index.
- Mixed Housing Data: The housing market index surged by 4 points as homebuilders experience an increasing demand from buyers. But despite the growing appetite for new construction, July's housing starts slipped, in part because builders are struggling to find experienced labor and new sites to build on.
This week, we will receive more data that helps deepen our perspectives on housing market health, Q3 expectations, and the Fed's upcoming plans.
In this time of dramatic headlines and geopolitical uncertainty, we want to remind you that you are in control of your wealth and financial future. No matter what the talking heads want you to believe, stay focused on market fundamentals. Please call or email if you have any questions concerning specific market data or larger, developing issues.
Quote of the Week
"The best and most beautiful things in the world cannot be seen or even touched. They must be felt with the heart."
Golf Tip of the Week
Lose the Golf Fat and Thin Shots
The two main causes of fat and thin shots are poor weight distribution and early release of the hands.
Make sure your weight is not behind the ball line and your club face is not ahead of your hands. One or both of these mistakes will cause the fat or thin shot. The center of your hips and sternum should not be behind the ball. To eliminate this problem, you must have at least 70% to 80% of weight on the forward side at impact. Your hands also should be slightly ahead of the club face with some shaft lean.
If you shift your weight and hands forward, the center of your hips will be past the ball and your sternum will be in line with or slightly ahead of the ball. This produces more of a downward strike, creating better contact, power, and distance.
From the top of the swing, start down by driving your right hip down toward the ball. This will move your weight left and through the ball. At the same time, swing your arms down, keeping your forearms close together, and swing through the ball with the handle leading the club face. This will help you to develop a late release of the club head.
Tip courtesy of Stan Moore | Golf Tips Magazine
Financial Question of the Week
How should I react to stock market volatility?
We recommend reacting calmly and without panic in response to short-term stock market volatility. We believe investors should have an adequate understanding of investment risks and take a long-term approach to their investments.
In light of market volatility, we may take advantage of rebalancing opportunities, but it is important to keep your long-term goals in mind.
If you have friends or family members who are unsettled by swings in the market, we would be happy to speak with them about strategies they can use to protect their portfolios in uncertain times.