Andy presenting to the Virtua Medical Group on the topic of Financial Wellness.
Markets went for a wild ride last week—especially on Friday. In fact, on December 1, the S&P 500 had its largest fluctuations since the day after the 2016 presidential election.
Nonetheless, two of the major domestic markets hit new record highs on Thursday and ended the week with sizable gains. The S&P 500 added 1.53% and the Dow gained 2.86%. Meanwhile, the NASDAQ lost 0.60% and international stocks in the MSCI EAFE gave back 0.95%.
Last week was a relatively quiet time in the domestic markets. We did not receive a tremendous amount of economic data, and trading halted Thursday for the Thanksgiving holiday. Nonetheless, all 3 of the major domestic indexes experienced sizable gains in only 4 trading days. By Friday, the S&P 500 added 0.91% and closed above 2,600 for the first time in its history. The Dow was also up 0.86%, and the NASDAQ gained 1.57%. International stocks in the MSCI EAFE had a 5-day trading week and grew by 1.85%.
A variety of factors contributed to this performance—from growth in the tech sector to increasing crude oil prices. But a specific event also helped push stocks higher: Black Friday.
Domestic stock performance varied last week, with the S&P 500 and Dow losing ground for the 2nd straight week, while the NASDAQ posted gains. By Friday, the S&P 500 had dropped 0.13%, the Dow gave back 0.27%, and the NASDAQ gained 0.47%. International stocks in the MSCI EAFE stumbled, dropping 0.67%.
Tax reform remained a key focus in the markets, as investors questioned whether changes will happen by the end of 2017. The markets have largely priced in expectations that tax reform will move forward, a belief that has helped drive this year’s record prices. Treasury Secretary Mnuchin expects the President to receive a bill by Christmas, but despite his update, concerns about meeting this deadline remain. This uncertainty—combined with questions about differences between the House and Senate plans—has contributed to the market volatility we’ve seen in recent weeks.
While tax reform may be impacting stocks right now, going beyond the geopolitical debate reveals various positive economic updates.
After posting gains every week since September, U.S. stocks declined by market’s close on Friday. The S&P 500 and Dow ended their longest stretch of weekly increases since 2013, and the NASDAQ ended its own 6-week streak.1 By November 10, the S&P 500 declined 0.21%, the Dow was down 0.50%, and the NASDAQ slipped 0.20%.2 Meanwhile, the MSCI EAFE dropped by 0.45%.3
While these declines are not huge, understanding why stocks dropped after several weeks of steady gains is important. The markets are incredibly complex, so we cannot point to one single detail that drove their performance. We can, however, help you gain insight into what influenced investors’ decisions.
The Market’s Drop in Context (more…)