17 - Investor Sentiment

Written by Caldwell Trust | Jul 18, 2017

Your Market Update:

Fed Chair signals continued accommodative monetary policy
Domestic equity markets advance strongly for the week
Ten-year Treasury yield down slightly on the week

Equity markets advanced strongly last week driven primarily Fed Chair Yellen’s testimony before the Senate Banking Committee mid-week. Her comments were interpreted as indicating the Federal Reserve will remain relatively accommodative for now. Less than robust releases of the consumer price index and June retail sales also supports market thinking that rates will remain low for the foreseeable future. Consensus expectations remain that the Fed Funds rate will be raised one more time this year, and most likely after the Fed’s December meeting.

The NASDAQ was rose over 2% for the week and is up more than 17% for the year. Both the S&P 500 and the Dow advanced more than 1% in the first full trading week since mid- year. Technology stocks once again led all S&P sectors for the week. Energy and Basic Material stocks also performed well on the week. Telecommunications lagged on the week as it has all year. The benchmark 10-year Treasury yield declined slightly for the week and remains towards the low end of the 2017 trading range.

Earnings next week are dominated by large financial institutions and high visibility companies as Q2 earnings move into full swing. Friday a handful of money center banks reported satisfactory results but traded off partially on the prospects of rates remaining lower for longer. As indicated below, nine major financial institutions report results next week:

Monday – BlackRock and Netflix

Tuesday – Bank of America, Goldman Sachs, IBM, Johnson and Johnson, TD Ameritrade, and UnitedHealth Group

Wednesday – American Express, CSX, Morgan Stanley, Textron, and United Continental Holdings

Thursday – Bank of New York Mellon, Capital One Financial, eBay, and Union Pacific

Friday – Colgate-Palmolive, General Electric, SunTrust Banks, and Synchrony Financial

Among economic releases next week, housing starts for June are reported Wednesday. Thursday the Philly Fed Index for July, leading economic indicators for June, and initial jobless claims are reported.

Indices for the week and YTD are as follows:

S & P 500 up 1.41% for the week; YTD index return is 9.85%

NASDAQ Composite up 2.59% for the week; YTD index return is 17.26%

Dow Jones Industrial Average up 1.04% for the week; YTD index return is 9.49%

Benchmark 10-year Treasury bond yield stands at 2.33% down 6 basis points for the week.

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J. Chris McGee, CFA, CAIA, Chief Investment Officer holds an MBA in finance and marketing from the J. L. Kellogg Graduate School of Management at Northwestern University and a BS in commerce from the University of Virginia. He is a member of the CFA Institute, CFA Tampa Bay and CAIA Association. He also served on the candidate curriculum committee of the CFA Institute and served as a grader for the CFA Examination for the CFA Institute in Charlottesville, Virginia. He has served on the board of directors of Selah Freedom, Sarasota, since 2014.

Chris McGee heads Caldwell’s investment committee, which draws on a team of experienced in-house professionals and carefully chosen outside analysts to make decisions for client portfolios.

A Chartered Financial Analyst (CFA) and Chartered Alternative Investment Analyst (CAIA), McGee had previously been senior investment adviser and senior vice president at PNC Wealth Management in Sarasota for nearly a decade. Prior to that he was portfolio manager for five years with U.S. Trust (formerly Bank of America) in Sarasota. Before relocating here, he had served as vice president, capital management, for Wachovia Bank in Winston-Salem, North Carolina.

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About Caldwell Trust Company

Caldwell Trust Company is an independent trust company with offices in Venice and Sarasota, Florida. Established in 1993, the firm currently has nearly $1 billion dollars in assets under management for clients throughout the United States. The company offers a full range of fiduciary services to individuals including services as trustee, custodian, investment adviser, financial manager and personal representative. Additionally, Caldwell manages 401(k) and 403(b) qualified retirement plans for employers.

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