Markets tuned out noise from Washington last week and continued to focus on economic fundamentals. Mildly rebounding retail sales and strong consumer sentiment seem to point toward a modestly stronger second quarter.
After a three-week winning streak, both the Dow and S&P 500 reported slight losses. The Dow closed with a 0.53% loss, and the S&P 500 reported a 0.35% decline for the week. The NASDAQ, however, rose 0.34%.
MIXED SIGNALS CONTINUE
Soft retail earnings
Consumer retail purchases were up after a first-quarter decline. Sales rose by 0.4% (just shy of the 0.6% consensus), and 9 of the 13 retail categories posted gains. As expected, early second-quarter gains suggest the first-quarter decline was just a blip.
Continuing concerns over store closings
A report last month concluded that in excess of 8,600 brick-and-mortar stores could close in 2017 due to poor sales. Last year, at least 2,000 stores shut their doors, while just over 5,000 closed in 2015. The record for store closings occurred in 2008 when over 6,000 stores closed.
Strong consumer sentiment
Despite modest retail sales, consumer confidence reached a 4-month high. Consumer expectations are positive regarding job growth, income, and low inflation. Furthermore, 44% of surveyed consumers expressed optimism in their financial prospects - the highest percentage since 2004.
U.S. consumer prices rise in line with expectations
The consumer price index rose 0.2% in April, in line with expectations for the month. However, the medical care and communications sectors saw continuing price weakness.
This week, we will look forward to data regarding the strength of the housing market. Though the highest percent of consumers in over 10 years report positive opinions on selling homes, next week's numbers will give us a better idea of where the markets stand. Finally, the market will continue to watch oil prices, which steadied this week after three weeks of decline.
In the weeks ahead, possible corporate tax rate reductions and potential trade policy changes will remain in focus for markets. In addition, markets will remain interested in the Fed's interest rate plans and its plan to reduce its $4.5 trillion balance sheet.
As always, we will continue to track the impact of international and domestic political news on the markets and the economy.
Quote of the Week
"Go to the edge of the cliff and jump off. Build your wings on the way down."
Golf Tip of the Week
Fix Your Play By Flattening Your Backhand Swing
Cupping your wrist in your backswing can ruin your game, even when your swing is otherwise tight. When players cup, they bend their left wrist (right wrist for lefties) until the back of the hand and the forearm form an angle. This position will affect other aspects of your stance, such as folding your lead arm and separating your arms away from your chest and body. The result? A shot that can do everything from slicing or fading to traveling high and angling right - causing you to lose distance.
To flatten your wrist, try the "Book Drill," which you can practice anywhere that you have a hardcover book or clipboard (or other similar item) on hand.
- Place the book in your hands: Use your normal golf grip so the book is between your hands and forearms.
- Take slow backswings: As you do, pay attention to which forearm your book touches. When the book touches your right forearm (left forearm for lefties), observe your left wrist (right wrist for lefties) for a break or angle rather than being flat and bowed.
- Repeat backswing: In this next round, you'll want to make sure the book touches your left forearm rather than your right (swapped for lefties). When this happens, your wrist should be flat.
Repeat this process until your backswing naturally lands the book at your left forearm.
Tip courtesy of Golf Tips Magazine
Financial Question of the Week
How do I amend errors on filed tax returns?
Filing your taxes can be a complicated, cumbersome process. As a result, errors sometimes slip through and make it into the tax returns you file. If you noticed errors after you've filed with the IRS, you are able to make amendments. Here are some key tips to help you take the right steps.
Can you file amended returns electronically?
No. You must file an amended return by mailing the IRS a paper copy of form 1040X.
What changes does the IRS allow you to make?
Taxpayers can amend their return for specific reasons:
You can make changes to your return when you have edits such as updating your income amounts, correcting your filing status, and claiming deductions.
- Not Allowed:
Math errors: You typically do not need to file an amended return to change any math errors. The IRS calculates all math and automatically corrects wrong calculations that your return includes.
Missing forms: You don't need to file a new return if you forgot to include a form, such as your W-2. The IRS will send you a letter to request missing documents.
You usually have three years to file an amended return from the date that you originally filed. Other details apply, so be sure to check out further guidance on the IRS web-site.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.