The markets marched ahead last week with the S&P 500 and the NASDAQ reporting all-time records, albeit just slightly above previous highs. Volatility subsided as the CBOE Volatility Index, which gauges fear in the market, fell to 9.8 at the end of the week.
A few important economic developments also caught our attention.
Market News for the Week
Strong Corporate Earnings
Corporate earnings remain a bright spot as approximately 75% of S&P 500 companies beat their Q1 earnings estimates. S&P 500 corporate earnings are averaging a 13.9% increase - the best performance in over 5 years.
First Quarter GDP Revised Upward
The good news is that Q1 GDP revised upward from 0.7% to 1.2% growth. However, the economy continues to grow at a less-than-robust rate at approximately 2% on a year-over-year basis, as it has since 2011.
Oil Prices Fell
U.S. crude ended the week at $49.80 after prices fell almost 5% on Thursday following OPEC's announced 9-month extension to limit oil production. Investors remain cautious; U.S. oil production has spiked by over 10% in the last year, keeping oil prices down by offsetting reduced OPEC production.
Softening Housing Sales
New home sales fell 11.4% in April to an annualized rate of 569,000. Median new home prices dropped 3.0% to $309,200, as sales are tracking for only a modest 0.5% gain for the year. April's existing home sales dropped 2.3% in another indication of softening home sales.
The Fed Plans to Tighten Its Balance Sheet
As expected, the Federal Reserve FOMC unveiled a proposal to gradually unwind its $4.5 trillion balance sheet with monthly limits. The process is likely to begin later in the year, though the Fed has not announced a specific date.
Heading Into Summer
After Memorial Day, the shortened workweek brings more attention-worthy reports as investors will continue to evaluate the prospects for a stronger Q2 GDP performance. Tuesday's April consumer spending reports and Friday's trade data should give us a better picture of where Q2 GDP is heading.
Investors will continue to monitor the U.S. trade gap. April exports were down 0.9% while imports were up 0.7%, creating an unfavorable gap of $67.6 billion. Investment in new equipment will also provide investors with another important indicator of future economic growth. New equipment orders have so far remained flat for the year, though. Finally, the Fed's plans for a possible interest rate hike in June will be on investors' radar.
If you have questions about where you stand today or how to prepare for tomorrow, we are here to talk. Our goal is to give you the facts and insight you need to remain informed and in control of your financial future.
Quote of the Week
"Attempt the impossible in order to improve your work."
Golf Tip of the Week
Fix Your Slice: Avoid Parallax
Slicing the ball is all too common for golfers. And when they try to use their instincts to overcome the challenge, they often hit the ball even farther right. One way to fix your slice is to avoid parallax. Though golfers focus on the target, many actually align to the left. Because of parallax, golfers swing further left, try to pull the ball to hit their target, and end up opening their clubface to the incorrect path at impact. The result? A slice.
You can overcome parallax by having an intermediate target. To do so:
- Stand behind the ball.
- Look down your target line by 3 to 5 feet and choose a spot.
- Square your clubface to your chosen spot.
- Make your body perpendicular to the face.
- Put trust into your aim and start your ball just to the right of your intermediate target.
- Close your clubface at impact by hitting from the inside.
The result from this exercise is a draw and should put your ball correctly on target.
Financial Question of the Week
How do I Safeguard my Passwords?
As we do more of our daily activities online, we become more vulnerable to security compromises, such as breached data and identify theft. A key item that can put you at risk is the vulnerability of your passwords. Here are tips for taking better steps to safeguard your passwords to protect your important data.
1. Create long passwords
Breaking into a long password is more difficult to do than one with just a few characters and numbers. As such, you should create passwords that have a minimum of 8 characters.
2. Use combinations of characters and capitalization
Sometimes companies will control what types of characters you can use. When you have the freedom to choose a variety of characters, you can create a secure password using a combination of letters, numbers and symbols.
You also should vary using capitalized and lowercase letters. Be sure to include at minimum one uppercase and one lowercase letter.
3. Avoid personal information
While details such as your children's or pets' names can be memorable, they make guessing your password easy for criminals. Avoid using any personally identifying information in your chosen password.