May brought a flurry of market and economic information for investors to mull. First-quarter gross domestic product (GDP) fell at a 0.7% annual rate, revised down from a lackluster 0.2% gain. Corporate profits also fell, reflecting a stronger dollar, weakness abroad, adverse winter weather and possibly some seasonal adjustment issues. Pending home sales, however, climbed to a nine-year high in April. Consumer spending also gained ground, but business fixed investment fell. The dollar surged then cooled, and oil prices may be at or near a bottom. Japan’s economy grew at its fastest pace this year, while Greece remains a wild card. Chinese shares declined, and the European Central Bank warned that slow growth could threaten its financial stability.
Despite the mild ups and downs, the S&P 500 hit new highs during the month, and the major domestic indices continued their upward momentum. The international EAFE index stumbled, but didn’t erase the gains from April. And the 10-year Treasury climbed higher after the Federal Reserve indicated it’s unlikely to raise short-term interest rates when policymakers meet again in June.
5/29/15 Close 4/30/15 Close Change Gain/Loss
DJIA 18,010.68 17,840.52 +170.2 1.0%
NASDAQ 5,070.03 4,941.43 +128.6 2.6%
S&P 500 2,107.39 2,085.51 +21.9 1.0%
MSCI EAFE 1,898.98 1,918.40 -19.4 -1.0%
Performance reflects price returns as of May 29, 2015.
The Fed expects the economy to return to a “moderate pace” of growth after the first-quarter slowdown. Since the Fed’s April meeting, we’ve seen improved payroll figures, as well as weaker-than-expected data on manufacturing and retail sales, which could translate to a slight slowdown for the second quarter.
Despite mixed data, Chief Investment Strategist Jeff Saut “remains in favor of the upside for investors. … Growth will pick up in the third and fourth quarters of this year. My work shows there is still sufficient internal energy to power this market.”
Chief Economist Scott Brown concurs, noting that he also expects “moderate economic growth in the near term.”
More data is expected in the next week, and I’ll continue to monitor any relevant developments from the domestic and emerging markets. And, I’ll be sure to share any information that could affect your long-term financial plan.
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Investing involves risk, and investors may incur a profit or a loss. Past performance is not an indication of future results. Investors cannot invest directly in an index. The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. International investing involves additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. These risks are greater in emerging markets. The performance noted does not include fees or charges, which would reduce an investor’s returns. There is no assurance the trends mentioned will continue or any forecasted events will occur.