Last week gave a number of things for both investors and non-investors to think - and worry - about. From North Korea's missiles to Hurricane Harvey's devastation to an unemployment uptick, the headlines were busy. Yet, despite these circumstances, U.S. stocks posted gains again this week - and the NASDAQ ended Friday with a new record high and 2017's best weekly performance. Overall, the S&P 500 added 1.37%, the Dow was up 0.80%, the NASDAQ gained 2.71%, and the MSCI EAFE increased by 0.55%.
So, what did we learn about the economy last week that helped contribute to these gains?
Big News: GDP Hits 2-Year High
On August 30, the Commerce Department released its second reading of Q2 Gross Domestic Product. After sluggish growth in the first quarter of 2017, consumer and business spending helped advance our economy in April through June. In fact, the revised reading increased to a 3% annual growth rate, which beat expectations and represented the fastest growth since Q1 of 2015.
As we predicted in last week's market update, larger core durable goods orders contributed to this positive GDP report.
Solid Support: Manufacturing Index Jumps
The Institute for Supply Management's manufacturing index, which measures business expansion or contraction, reached a 6-year high in August. According to Economist Andrew Hunter, this growth spike could generate GDP growth as high as 4% in the third quarter. That pace would be far above the average during the current economic recovery and would mean the economy is growing more quickly than many people expected.
Of course, we are still in Q3, and any number of details could affect economic growth. We have many important happenings on the horizon that the markets will be watching, including debt-ceiling decisions, tax-reform outcomes, and much more. However, recent data indicates that both consumers and businesses are opening their wallets - and the economy is growing. After 9 years of economic recovery where growth has often been lackluster, this quickening pace is welcome news.
Looking ahead, we will continue to focus on uncovering the best opportunities for your long-term goals. As more data and insight come in, we will keep you informed every step of the way.
Quote of the Week
"I don't have to chase extraordinary moments to find happiness - it's right in front of me if I'm paying attention and practicing gratitude."
Golf Tip of the Week
When & How to Release
The release in a golf swing is important because this movement generates up to seven times more clubhead speed than usual if it is executed correctly. The release of cocked wrists upon impact with the ball is a natural motion that results from a proper setup, address, backswing, and downswing. To obtain the feeling of your arms rotating and your wrists unhinging for the release, use a drill to practice.
Cock your wrists to 90 degrees at the top of the backswing. Your body will be in a coiled position, ready to generate power on the downswing. Your knees and hips will move into the downswing as your arms come to parallel with the ground.
Straighten your right arm during the downswing and allow your arms, hands, and clubface to rotate, bringing you back to the address position as you strike the ball. Hold your wrists in a cocked position until impact. Accelerate the clubhead through the ball with maximum speed at impact. This clubhead speed will generate the power during the downswing.
Unhinge the right wrist as late as possible into impact for the greatest swing speed, resulting in greater distance on the shot. Tension in your arms and hands will prevent this late release. This movement should occur naturally without manipulating the clubhead with the hands. Allow your right arm to cross over your left after impact. Hit through the ball as your wrists release for a strong follow-through.
Tip courtesy of Golf Week Magazine
Financial Question of the Week
What risks do I need to consider when planning for retirement?
A retirement plan can be effected by many unforeseen circumstances, but you should consider five major challenges most retirees face: the potential for outliving one's assets; the threat of rising living costs; the impact of increasing health care costs; uncertainty about the future level of Social Security benefits; and the damage to long-term financial security that can be caused by excessive withdrawals in the early years of retirement. Understanding each of these challenges can lead to more confident preparation.
If you or someone you know needs help analyzing your retirement risks, please feel free to contact me.