Markets experienced heightened volatility last week, with the S&P 500 rising 0.49% and Dow dropping 0.48%. Meanwhile, the NASDAQ rose 1.62%, as international markets took a small dip, with the MSCI EAFE losing 1.10%.
FACT OF THE WEEK
14 percent of Americans believe astrologers, fortune tellers and psychics can foresee the future.
The markets' highs and lows came from a variety of economic and geopolitical developments. The U.S. jobs report posted solid gains while international trade concerns continued to cause some unease. In this market update, we'll break down the major stories to help you understand what moved markets.
Impressive Jobs Report
Outstanding nonfarm payroll employment numbers rolled in on Friday, and the data supports a strong U.S. economy. Here is a snapshot of some key numbers:
- Unemployment dropped to 3.8% - its lowest recording in 18 years.
- Payroll growth jumped to 223,000, far beyond the expected 188,000.
- Average hourly earnings climbed 2.7%; as a result, the Fed will likely raise interest rates two more times in 2018.
Taken together, the data gives investors and analysts a positive outlook. With more people working, consumption could rise, which could increase demand on production and keep people employed. Some analysts believe that this cycle should continue, barring any unforeseen disruptions. Meanwhile, the solid data helped ease market tensions and keep the U.S. dollar up, despite concerns of a potential global trade war.
New International Tariffs
On Tuesday, President Trump said the U.S. would implement a 25% tax on $50 billion worth of products from China, including high-tech investments. This decision seemed to surprise China, as rumors of a trade war had recently calmed. U.S. and Chinese officials were unable to resolve their dispute over tariffs on Sunday, June 3.
The Trump administration also announced tariffs on metals from Canada, Mexico, and the European Union - all U.S. allies. In an attempt to reduce our trade deficit, Trump placed a 25% tax on steel and a 10% tax on aluminum. International leaders reacted quickly to the news, claiming they may strike back on U.S. goods like orange juice, motorcycles, bourbon, apples, and other products.
Next week, we will focus on Tuesday's job openings and Wednesday's international trade reports. Other indicators like jobless claims and factory orders will help balance out a relatively quiet week for economic data. In addition, we will continue to track developments on trade negotiations and the potential summit between President Trump and North Korean leader Kim Jong-un.
If you have questions about how any of this information may affect you, please contact us. We are happy to help you.
BEWARE THE SECRET-SHOPPING SCAM
The Federal Trade Commission is warning that an old scam involving fraudulent checks and shopping has again reared its head.
Here's how it starts. You get a check in the mail with a job offer as a secret shopper. You deposit the check and see the funds in your account a few days later, and the bank even tells you the check has cleared.
Your first assignment is to test the in-store money transfer service, like Western Union or MoneyGram, by sending some of the money you deposited. Or you might be told to use the money to buy reloadable cards or gift cards, such as iTunes cards. You're instructed to send pictures of the cards or to give the numbers on the cards.
Eventually, the bank finds out the check you deposited is a fake, which means you're on the hook for all that money.
Banks make money available from deposited checks in a few days, but a fake check can take weeks to be discovered.
The lesson: If anyone ever asks you to deposit a check and then wire or send money in any way, you can bet it's a scam.
FINANCIAL STRATEGY OF THE WEEK
PROTECT AGAINST LARGE FINANCIAL LOSSES
Purchase adequate insurance to protect against potential "big dollar" losses. These include disability, liability, catastrophic medical expenses, the death of a household earner or family caregiver, and major damage to, or the total destruction of, your home and/ or personal property.
Insurance is a way of managing risks. When you buy insurance, you transfer the cost of a potential loss to the insurance company in exchange for a fee, known as the premium. Insurance companies invest the funds securely, so it can grow, and pay out when there's a claim.