Market at record levels, what’s next?
Markets experienced another
hot week as the Dow posted its best winning streak since 1996, with ten days up
in a row, while the S&P 500 inched within 10 points of its historical high
before closing lower on Friday.[i] For the week, the S&P 500 gained 0.61%, the Dow gained 0.81%,
and the Nasdaq gained 0.14%.[ii]
We’re disappointed to report that lawmakers don’t appear to be making any headway on the sequestration front.
President Obama met with House Republicans last week but made little progress
in convincing them to accept tax increases as part of a deficit reduction plan.
With criticism flying from both sides, it seems that they are still too far
apart to hope for a deal.[iii]
On a more positive note,
the number of Americans filing new unemployment claims fell for the third
straight week, indicating that the labor market is recovering steadily. Initial
claims dropped by 10,000 claims, handily beating expectations of a rise in
claims. Even better, the four-week moving average for new claims, widely
considered a less volatile measure, fell to a new five-year low, suggesting
that underlying labor market trends are improving.[iv]
A surge in energy costs led
to an increase in the Consumer Price Index, a broadly used measure of
inflation. The CPI increased by 0.7% in February after remaining flat in
January. However, excluding volatile food and energy prices, the more stable
core prices increased just 0.2%, which was in line with expectations.[v]
Historically, markets have
often pulled back after reaching historic highs. While we believe that general
economic trends are heading in the right direction, in the short term, we won't
be surprised by some market consolidation as traders take profits and plan
their next moves. We always maintain focus on long-term financial movements and
use these short-term dips and rallies to build new positions and find
opportunities.
ECONOMIC CALENDAR:
Wednesday: Retail
Sales, Import and Export Prices, Business Inventories, EIA Petroleum Status
Report, Treasury Budget
Thursday: Jobless
Claims, Producer Price Index
Friday: Consumer
Price Index, Empire
State
Notes: All index returns exclude reinvested
dividends, and the 5-year and 10-year returns are annualized. Sources: Yahoo! Finance and Treasury.gov. International performance is represented by
the MSCI EAFE Index. Past performance is no
guarantee of future results. Indices are unmanaged and
cannot be invested into directly.
HEADLINES:
Consumer sentiment tumbles on sequestration frustration. The Michigan/Reuters Consumer sentiment gauge fell to its lowest
level in a year as Americans lost patience with the government and felt less
optimistic about economic growth.[vi]
Oil prices rise ahead of President’s Mid-East trip. Oil prices rose Friday amid concerns about renewed tensions ahead
of President Obama’s trip to Israel
QUOTE OF THE WEEK:
“Commit to thinking
about what you want, rather than how impossible or difficult a dream may seem’ Dr. Wayne Dyer
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