December 11, 2017 - Strong Markets for the Holidays

| December 11, 2017

As the holiday season progresses, the markets continue to impress. Last week, many energy, financial, and industrial sector stocks helped drive performance.^[1] Hitting record highs yet again, the S&P gained 0.35%, and the Dow jumped 0.40% for the week.^[2] Meanwhile, the NASDAQ fell slightly by 0.11%, and the MSCI EAFE rose 0.08%.^[3]

Solid labor market conditions and a rebounding retail climate are helping to support the economy as the year closes.^[4] Here are some developments that stood out last week:

Promising Labor Market Numbers

Encouraging news came on Friday when we learned that nonfarm payroll jobs rose more than expected in November, coming in at 228,000.^[5] Manufacturers have created almost 200,000 new jobs in the last 12 months and 1 million new factory jobs since 2010.^[6] We have now had 86-straight months of job gains, the longest stretch in U.S. history.^[7]

This growth in new jobs has helped to keep unemployment down, which remains at a 17-year low of 4.1%.^[8] Additionally, average hourly wages have increased by 2.5% for the year.^[9]

Retail Climate in Positive Territory

As the job market expands and people have more spending power, we're experiencing a robust retail climate. Retail stocks are rebounding after a long market lag, and holiday shopping is strong this season with predicted growth from 3.6% to 4% over last year. Further, brick-and-mortar shops are even feeling the shopping strength, emerging as some of the best performing retail investments, despite their general drop in 2017.^[10]

What Lies Ahead

Now that Congress has avoided a government shutdown - at least for a few weeks - the Senate and the House can focus on the tax bill.^[11] While progress has been made, they still need to negotiate the financial bill's terms.^[12]

Next week, investors will follow the Fed to see if it raises interest rates, as expected. In addition, the Fed could also comment on inflation expectations and address concerns about potential asset bubbles.^[13]

As the holidays wind up, we will continue to monitor the markets and focus on the fundamentals. If you have questions about how this news affects your financial life, we're here to talk. Feel free to contact us and find the answers you need.

ECONOMIC CALENDAR

Monday: JOLTS
Wednesday: Consumer Price Index, FOMC Meeting Announcement
Thursday: Jobless Claims, Retail Sales, Business Inventories
Friday: Empire State Mfg Survey, Industrial Production

_{Notes: All index returns (except S&P 500) exclude reinvested dividends, and the 5- year and 10-year returns are annualized. The total returns for the S&P 500 assume reinvestment of dividends on the last day of the month. This may account for differences between the index returns published on Morningstar.com and the index returns published elsewhere. 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.}

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The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.

The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.

The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.

The Dow Jones Corporate Bond Index is a 96-bond index designed to represent the market performance, on a total-return basis, of investment-grade bonds issued by leading U.S. companies. Bonds are equally weighted by maturity cell, industry sector, and the overall index.

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The S&P/Case-Shiller Home Price Indices are the leading measures of U.S. residential real estate prices, tracking changes in the value of residential real estate. The index is made up of measures of real estate prices in 20 cities and weighted to produce the index.

The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

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