After a volatile September, stocks ended the third quarter of 2016 resoundingly in the black. In the third quarter, the S&P 500 gained 3.31%, the Dow grew 2.11%, the NASDAQ added 9.69%, and the MSCI EAFE gained 5.80%.
What drove markets in Q3?
After pulling back in late June after Britain’s surprise vote to exit the European Union, markets recovered quickly in the early days of the third quarter.
Though investors were able to enjoy a low-volatility summer, stocks returned to a choppy pattern in September.
Two key areas contributed to a lot of stock market volatility last quarter: monetary policy and the timing of the Federal Reserve’s next interest rate hike, and uncertainty around the November elections.
The presidential election is hotly contested and too close to call, giving investors plenty of concern about how the next administration will tackle the many issues facing America. House and Senate races also stand close, giving markets the grim prospect of several more years of filibusters and Washington antics.
Monetary policy also affected markets last quarter as investors speculated on the possibility of a September interest rate hike. Though the Fed chose not to raise rates at the last meeting, December is still in play.
Globally, the majority of the world’s central banks are moving toward lower interest rates (the chief exception being the U.S.). While the Fed is trying to raise rates this year and communicating its intentions clearly, the European Central Bank and Bank of Japan are in full-on quantitative easing mode in an effort to boost sagging economic growth.
This tug of war between major monetary players is the source of a lot of uncertainty in the world. Also stoking investor fears is the possibility that central banks have exhausted the limits of what they can do to boost economic growth.
What do we know about Q3 earnings season?
Third-quarter earnings reports are beginning to trickle in, and analysts are expecting yet another quarter of negative earnings growth. Estimates for Q3 profits and revenue declined as the quarter progressed, which is in line with the trend we’ve seen over the past few years. Overall, S&P 500 company earnings are expected to be down -2.9% over Q3 2015, though revenues are expected to be up +1.2%. These are very preliminary estimates, and we can expect plenty of surprises and individual success stories as earnings season progresses.
What might we expect next?
The weeks ahead will likely be dominated by the upcoming November elections. As election uncertainty resolves, attention will likely turn to the Fed’s December meeting and economic data. We’ll know more about future Fed moves after the official minutes from the September meeting are released this week. Consumer confidence has been volatile this year, but analysts hope that Americans will feel confident enough to open their wallets for the critical holiday shopping season and give economic growth a final boost.
Monday: Motor Vehicle Sales, PMI Manufacturing Index, ISM Manufacturing Index, Construction Spending
Wednesday: FOMC Minutes
Thursday: Jobless Claims, Import and Export Prices, EIA Petroleum Status Report, Treasury Budget
Friday: PPI-FD, Retail Sales, Business Inventories, Consumer Sentiment
- U.S. auto sales pause in September. Consumers tapped the brakes on motor vehicle purchases, causing the three major U.S. automakers to report declines in sales.
- Construction spending falls again in August. Builders cut back on construction project spending for a second straight month, suggesting demand for residential and non-residential projects may be waning.
- Factory activity picks up in September. U.S. manufacturing experienced a surge of unexpected growth last month after declining in August as new orders and production activity both grew.
- September jobs report shows labor market strength. The economy added 156,000 new jobs last month, missing Wall Street expectations of 175,000. The labor force participation rate ticked upward as more Americans joined the labor force, and the unemployment rate nudged upward to 5.0%.
Quote Of The Week
“Teach self-denial, and make its practice pleasurable, and you create for the world a destiny more sublime than ever issued from the brain of the wildest dreamer.”
– Sir Walter Scott
Recipe Of The Week
Pumpkin Spice Smoothie
Add some fall spice to this delicious, healthful smoothie!
Makes 1 smoothie
1/2 cup ice
1 whole frozen banana, peeled and chopped into chunks
1/2 cup whole milk or almond milk
1/3 cup pure pumpkin puree
1 tablespoon maple syrup
1/4 tsp vanilla
Pinch of cinnamon
Pinch of ground nutmeg and/or allspice
(Optional: use pre-ground pumpkin pie spice mix)
Add the ice, milk, banana, pumpkin puree, maple syrup, and spices to a blender.
Blend at high speed until smooth and frothy.
Serve topped with a sprinkle of cinnamon.
Recipe adapted from Sarah Copeland | RealSimple.com
Help Your Community by Becoming a Tax Volunteer
If you have some free time and want to pitch in and help out in your community, think about becoming a tax volunteer. The Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs need volunteers for next year’s tax season. Volunteers help prepare tax returns for low-income and elderly taxpayers. Here’s what you should know:
Volunteer hours are flexible and volunteers usually spend about three to five hours each week between January and April helping out.
Volunteer sites are available in communities around the country and are usually in neighborhood centers, libraries, schools, shopping malls, and other similar places.
You can request to work specifically with military families and help those who serve our country.
The IRS provides specialized training and materials and will teach you how to prepare basic tax returns.
To learn more about volunteering, contact our office or visit IRS.gov and type “tax volunteer” in the search box.
Tip courtesy of IRS.gov
Drill for Center Contact
One of the fundamentals to hitting better and more consistent shots is making solid contact with the precise center of the ball. How you hit the ball will affect the spin, launch angle, distance, curve, and path of the ball. It can also affect your perception of your swing; that is to say, off-center contact can lead you to believe you have other problems with your swing. To be a great ballstriker you need to have the ability to hit the ball in the exact center of the face.
Here’s a great drill that will help: Next time you’re at the course, take along two extra balls and a permanent or dry erase marker. If you’re using range balls, definitely use the dry erase marker so that you won’t leave any permanent marks.
Using your marker, draw a big dot on the ball so that you can see where you’re striking the ball each time. If you find that you’re hitting the ball too much on the toe or heel of the ball, you can use the following drill.
If you’re hitting too much ahead of the dot, set up two balls in a line away from you, with the dot ball being the one farthest from you. Often, the cause of toeing the ball is striking with your arms too close to your body. Tee up to the closer ball but strike the dotted ball to help yourself feel the right extension in your arms.
If you have the opposite problem, tending to heel the ball, perform the same drill but placing the dotted ball closer to you and teeing up on the farther ball.
Tip courtesy of Justin Klemballa, PGA | Golf Tips Mag
Toss These Common Household Items
Old nonstick pans: Pre-2006 or scratched pans may contain harmful chemicals in the pan lining. Some manufacturers take old pans when you purchase new ones. Otherwise, check with your local trash collection authority for information on where to take discarded cookware.
Old soup cans: Some soup cans contain BPA in their plastic lining, a chemical that has been linked to cancer and other diseases in lab animals.
Your toothbrush: If your toothbrush is more than a few months old, it may be time to replace it. Toothbrushes can collect germs in frayed bristles, so the American Dental Association recommends replacement.
Old vitamins: Expired or improperly stored vitamins will lose their efficacy over time. Pill bottles should always be stored in cool, dry places.
Tip courtesy of AARP
Switch to High Efficiency Outdoor Lighting
A standard 100-watt outdoor floodlight can cost you $40 in electricity in a year when run for about six hours a day. Worse, it can produce more than 400 pounds of CO2, which really adds to your household’s environmental footprint. When it’s time to replace your outdoor lights, consider opting for compact-fluorescent versions. They are equally bright and use much less energy. You may also want to switch from always-on lights to motion sensor-activated versions on nonessential lights. You can find modestly priced screw-in motion sensor lights at your local hardware store. To light your way to the driveway or through your garden, replace halogen bulbs with solar-powered LED lights.
Tip courtesy of HGTV
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
Diversification does not guarantee profit nor is it guaranteed to protect assets.
International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.
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 S&P U.S. Investment Grade Corporate Bond Index contains U.S.- and foreign-issued investment-grade corporate bonds denominated in U.S. dollars.
The SPUSCIG launched on April 09, 2013. All information for an index prior to its Launch Date is back-tested, based on the methodology that was in effect on the Launch Date. Back-tested performance, which is hypothetical and not actual performance, is subject to inherent limitations because it reflects application of an Index methodology and selection of index constituents in hindsight. No theoretical approach can take into account all of the factors in the markets in general and the impact of decisions that might have been made during the actual operation of an index. Actual returns may differ from, and be lower than, back-tested returns.
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.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Past performance does not guarantee future results.
You cannot invest directly in an index.
Consult your financial professional before making any investment decision.
Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.
Featured Image Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized. Sources: Yahoo! Finance, S&P Dow Jones Indices, and Treasury.gov. International performance is represented by the MSCI EAFE Index. Corporate bond performance is represented by the SPUSCIG. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.
These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative, Broker dealer or Investment Advisor, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.
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 http://www.global-rates.com/interest-rates/central-banks/central-banks.aspx [Accessed October 9th, 2016]