Weekly Commentary, 12/19/16 to 12/23/16
Quiet holiday trading resulted in small gains for stocks. The media was fixated on the Dow Jones closing in on the psychologically important 20,000 level. Although the actual number means nothing, it does get investor attention and will be headline grabbing news if ever achieved.
The Dow Jones Index gained 0.46% closing at 19,933 after coming within 13 points of hitting the magic 20,000 level earlier in the week. The S&P 500 added 0.25%, and the Russell 2000 took the top spot again, advancing 0.53%.
The bond market was in holiday mode after a tense few weeks. Buyers stepped in for U.S. Treasury 10-yr notes at the 2.60% yield level, which eventually settled in at 2.54% by Friday, December 23.
The Chicago Board of Options Exchange (CBOE) Volatility Index (VIX) closed at 11.41, near a two year low. A low reading for the VIX, also known as the market’s fear gauge, is a sign that investors are not pricing in big risks in the market. The VIX is based on the price of protective options used to hedge against a decline in the S&P 500 over the next 30 days.
There were two important economic releases over the week. 3rd quarter GDP was revised upwards 0.2% to an annual rate of 3.5%. The Federal Reserve’s (Fed) preferred measure of inflation, core personal consumption expenditures (PCE), rose 1.6% for November. Core PCE is below the Fed’s target of 2% and below the October release of 1.8%.
The backdrop for equities remains constructive based on economic and technical trends as we move into what should be another quiet holiday week.
Best wishes to you and your families for a happy, healthy and prosperous New Year. Thank you for your continued support.
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 VIX is the Chicago Board Options Exchange Market Volatility Index, a popular measure of the implied volatility of S&P 500 index options. Often referred to as the fear index or the fear gauge, it represents one measure of the market's expectation of stock market volatility over the next 30 day period. 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.