Growth Report – Monday, February 12, 2018

WALL STREET SEES ITS FIRST CORRECTION SINCE 2016
On Friday, the S&P 500 settled at 2,619.55, down 5.16% for the week. Thursday, it entered correction territory just nine days after its January 26 record close. The Dow Jones Industrial Average made even bigger headlines last week by taking two 1,000-point drops within four days, the second occurring Thursday.1,2

Last Monday, U.S. equities took their largest single-session fall in more than six years as higher interest rates for bonds and inflation concerns strengthened selling pressure. To add to the anxiety, two of the financial industry’s top ‘roboadvisor’ websites crashed during Monday’s rout, frustrating individual investors. The Dow retreated 5.21% for the week to 24,190.90, while the Nasdaq Composite slid 5.06% to 6,874.49.1,3

SERVICE SECTOR GREW RAPIDLY IN JANUARY
At a mark of 59.9, the Institute for Supply Management’s latest purchasing manager index for the service sector bettered the forecast of analysts polled by Briefing.com, who expected a small climb to 56.7. The index was at 56.0 for December.4

EARNINGS LOOK STRONG
FactSet’s latest analysis of corporate profits shows a 14% Q4 earnings growth rate and a Q4 sales growth rate of 8.0% for the S&P 500. Through Friday, 65% of S&P 500 companies had reported quarterly results.5

A RETREAT FOR CRUDE
Oil also had a poor week, descending 9.6% in five trading days to a Friday NYMEX settlement price of $59.20. It rebounded Friday from an intraday low of $58.07.6

THIS WEEK: Heineken and Loews Corp. announce earnings on Monday. Baidu, Blue Apron, Denny’s, Kemper, MetLife, PepsiCo, Under Armour, Voya Financial, and Weibo present results Tuesday. Investors review January’s Consumer Price Index and retail sales report Wednesday, along with earnings news from Agilent Technologies, Applied Materials, Cisco, Credit Suisse, Hilton Worldwide Holdings, Hyatt Hotels, Marathon Oil, Marriott, Molson Coors, TripAdvisor, and Wyndham Worldwide. On Thursday, the earnings parade includes Avon, CBS, Nestlé, Shake Shack, Sonoco, and Waste Management; reports on initial jobless claims and January wholesale inflation also surface. The University of Michigan’s initial February consumer sentiment index arrives Friday, plus data on January construction activity and industrial production and earnings from Campbell Soup, Coca-Cola, Deere & Co., Enbridge, J.M. Smucker, Kraft Heinz, Ryder Systems, and Vulcan Materials.

% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA -2.14 +19.92 +14.58 +9.86
NASDAQ -0.42 +20.28 +23.05 +19.83
S&P 500 -2.02 +13.51 +14.51 +9.68
REAL YIELD 2/9 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.78% 0.41% -0.57% 1.36%

Sources: wsj.com, bigcharts.com, treasury.gov – 2/9/181,7,8,9
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

WEEKLY QUOTE

“Understanding human needs is half the job of meeting them.”

– Adlai Stevenson

WEEKLY TIP

Risk and reward go hand in hand when investing. For that reason, it is crucial to define your risk tolerance limits. When investors lose their tolerance, they can make emotional decisions they may later regret.

WEEKLY RIDDLE

Cheryl was driving a black car. Its lights were off, and there was no moonlight. A cat walked into the middle of the road. How did she know to stop?

Last week’s riddle:
No matter the time of day, it can open what you can’t. If not for it, on your front porch you would stand. What is it?

Last week’s answer:
A key.

Citations.
1 – markets.wsj.com/us [2/9/18]
2 – seattletimes.com/business/us-stocks-snap-higher-a-day-after-entering-a-correction/ [2/9/18]
3 – businessinsider.com/betterment-and-wealthfront-crash-during-market-bloodbath-2018-2 [2/5/18]
4 – briefing.com/investor/calendars/economic/2018/02/05-09 [2/9/18]
5 – insight.factset.com/sp-500-companies-with-more-global-exposure-reporting-higher-earnings-growth-in-q4 [2/9/18]
6 – cnbc.com/2018/02/09/oil-falls-below-60-for-first-time-in-2018-on-pace-for-big-weekly-drop.html [2/9/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=2%2F9%2F17&x=0&y=0 [2/9/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=2%2F9%2F17&x=0&y=0 [2/9/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=2%2F9%2F17&x=0&y=0 [2/9/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=2%2F8%2F13&x=0&y=0 [2/9/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=2%2F8%2F13&x=0&y=0 [2/9/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=2%2F8%2F13&x=0&y=0 [2/9/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=2%2F8%2F08&x=0&y=0 [2/9/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=2%2F8%2F08&x=0&y=0 [2/9/18]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=2%2F8%2F08&x=0&y=0 [2/9/18]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [2/9/18]
9 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [2/9/18]

This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This material was prepared by MarketingLibrary.Net Inc., for Mark Lund, Mark is known as a Wealth Advisor, The 401k Advisor, Investor Coach, The Financial Advisor, The Financial Planner and author of The Effective Investor. Mark offers investment advisory services through Stonecreek Wealth Advisors, Inc. a fiduciary, independent, fee-only, Registered Investment Advisor firm providing investment and retirement planning for individuals and 401k consulting for small businesses. Cities served but not limited to are: Park City, Salt Lake City, Murray City, West Jordan City, Sandy City, Draper City, South Jordan City, Provo City, Orem City, Lehi City, Highland City, Alpine City, and American Fork City in Utah.

Category: Blog, Growth Report