Weekly Commentary, 12/26/16 to 12/30/16
Stock prices drifted lower in the last trading week of the year capping off the first weekly decline since the surprising election win of Donald Trump. The Dow Jones Industrial Average fell short of the 20,000 level closing at 19,763 down 0.86%. The S&P 500 and the Russell 2000 each shed approximately 1.00%.
The underlying theme was a reversal of the trades that had been so successful since the election. Sectors that should benefit from “reflation” like financials, energy and industrials suffered while sectors that had been lagging were the outperformers. Utilities, healthcare and staples lead the way higher.
After one of the worst starts ever, 2016 turned out to be quite kind to U.S investors. On a total return basis, the Dow Jones rose 16%. The S&P 500 and the Russell 2000 returned 12% and 21%, respectively. The international markets lagged the U.S. The iShares MSCI EAFE ETF suffered over BREXIT fears and returned 1.37%. Emerging markets as measured by the iShares MSCI Emerging Markets ETF battled a stronger dollar but still managed to generate a return of 10.87%.
U.S. Treasury yields continued their recent decline on what could be a multitude of reasons: the Treasury’s successful completion of two auctions, a surprising set back in pending new home sales, a year-end rotation into fixed income from equities and increasing tensions with Russia and Israel. The 10-year U.S. Treasury note yield closed at 2.44%, down 11 basis points on the week.
As 2017 approaches, uncertainty around the new administration’s effect on geopolitics, global trade and currencies are just a few of the potential opportunities and challenges investors will likely face. We believe having and maintaining a long term investment plan that includes a well-diversified portfolio and risk management will provide a smoother journey in achieving investment goals.
Past performance is no guarantee of future results. Investments are subject to risk, and any of Stadion’s investment strategies may lose money. The investment strategies presented are not appropriate for every investor and financial advisors should review the terms and conditions and risks involved. Stadion’s actively managed portfolios may underperform during bull markets. Some information contained herein was prepared by or obtained from sources that Stadion believes to be reliable. There is no assurance that any of the target prices or other forward-looking statements mentioned will be attained. Any market prices are only indications of market values and are subject to change. The S&P 500 Index is the Standard & Poor’s Composite Index of 500 stocks and is a widely recognized, unmanaged index of common stock price. 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 Russell 2000 Index is a small-cap stock market index of the bottom 2,000 stocks in the Russell 3000 Index. It is the most widely quoted measure of the overall performance of the small-cap to mid-cap company shares. The MSCI EAFE (Europe, Australasia, and Far East) Index is a stock market index that is designed to measure the equity market performance of developed markets outside of the U.S. & Canada. The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey. It is not possible to invest directly in indexes (like the S&P 500) which are unmanaged and do not incur fees and charges. The U.S. 10-Year Treasury Note is a debt obligation issued by the United States government that matures in 10 years. The Sharpe ratio measures the excess return per unit of deviation, or risk. The core personal consumption expenditures index measures the prices paid by consumers for goods and services without the volatility caused by movements in food and energy prices. Any references to specific securities or market indexes are for informational purposes only. They are not intended as specific investment advice and should not be relied on for making investment decisions.
Past Performance is no guarantee of future results. Investments are subject to risk, and any of Stadion's investment strategies may lose money.