Investment Commentary – May 30th, 2017

Market Indices as of Market Close May 30th, 2017

Dow 21,029 (6.41% YTD)
S&P 2,412 (7.78% YTD)
NASDAQ 6,203 (15.23% YTD)
Gold $1,265 (9.13%)
OIL $49.52 (-12.76%)
US 10Y Treasury 2.209 (-23.65%)
Barclay Bond Aggregate (2.08% YTD)

Wall Street slips as energy, financials lose ground

U.S. stocks inched lower on Tuesday, with the S&P 500 retreating slightly from a record, as weakness in the energy and financial sectors outweighed gains in technology shares.
Oil prices fell to keep U.S. crude CLc1 below the $50 a barrel mark on concerns output cuts by the world’s big exporters may not be sufficient to lessen a global glut and signs of resurgent output in Libya.

The energy sector’s .SPNY 1.31 percent fall made it the worst performer among the major S&P 500 sectors. Exxon (XOM.N) was down 0.6 percent.
Financial stocks, down 0.8 percent, also supplied some downward pressure. JPMorgan (JPM.N) fell 1.7 percent and Bank of America (BAC.N) lost 1.4 percent as the two biggest drags on the S&P 500.

U.S. consumer spending recorded its biggest increase in four months in April and monthly inflation rebounded, pointing to firming domestic demand that could allow the Federal Reserve to raise interest rates next month.

“The markets are susceptible to geopolitical and to purely political risk, but in terms of the economy and in terms of earnings, we are where investors are comfortable,” said Peter Kenny, senior market strategist at Global Markets Advisory Group in New York.

“There isn’t a huge rush to put more money into equities, there isn’t a huge rush to put more money into Treasuries – the market is treading water.”

Consumer spending, inflation data support Fed rate hike case

U.S. consumer spending recorded its biggest increase in four months in April and monthly inflation rebounded, pointing to firming domestic demand that could allow the Federal Reserve to raise interest rates next month.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, is likely to remain on solid ground in the wake of other reports on Tuesday that showed confidence among households still at lofty levels despite some slippage this month and strong gains in house prices in March.

Consumer spending grew at its slowest pace in more than seven years in the first quarter, helping to restrict the increase in gross domestic product to an annual rate of 1.2 percent in the first three months of the year.

On Tap for the rest of the week:

Wednesday: Pending home sales, National Association of Realtors
Thursday: ADP National Employment Report, ADP; vehicle sales, U.S. Department of Commerce; Institute for Supply Management’s manufacturing index; construction spending, U.S. Census Bureau
Friday: Monthly jobs and unemployment, U.S. Bureau of Labor Statistics; trade balance, U.S. Census Bureau

LEADERS & LAGGARDS: This past week’s leaders were Utilities, Tech and Consumer Goods. Laggards were Basic Materials.

THIS DAY IN FINANCAL HISTORY: Aldrich-Vreeland Currency Act On this day in 1908, conservative legislator Senator Nelson Aldrich’s Currency Act passed. The Currency Act was designed as a boon to struggling banks. This granted banks the authority to issue currency that was pegged to commercial notes and government bonds.

The views presented are not intended to be relied on as a forecast, research or investment advice and are the opinions of the sources cited and are subject to change based on subsequent developments. They are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investments.

http://www.reuters.com/article/us-usa-stocks-idUSKBN18Q14O?feedType=RSS&feedName=businessNews
http://www.reuters.com/article/us-usa-economy-idUSKBN18Q1BA?feedType=RSS&feedName=businessNews