The Markets (as of market close April 21, 2017)

The Markets (as of market close April 21, 2017)
Better-than-expected earnings reports for the first quarter helped push stocks higher last week.  The small-cap Russell 2000, which had fallen below its end-of-year closing value, jumped 2.57% for the week and is now over 1.50% ahead of last year’s closing value. Gains in the industrial sector were reflected in an almost 1.0% advance in the S&P 500, while the NASDAQ increased nearly 2.0% for the week. On the other hand, energy companies didn’t fare as well, as oil fell below $50 per barrel.
At BWFA we trimmed our energy weightings throughout last year to an under-weighting from an over-weighting versus the indices, and we have maintained our small cap exposure where appropriate in the models that called for it.  In many cases we have committed to new areas of the small cap arena with broader based exposure through exchange traded funds.  This is serving our clients well so far in 2017.
Last Week’s Headlines
  • March storms may have played a role in holding back the start of new home construction, according to the latest report from the Census Bureau.  While the start of new home construction slowed, housing completions maintained a steady pace.
  • Sales of existing homes followed a dismal February with a robust March.
  • According to the Federal Reserve’s report, industrial production increased in March over February- the largest in the history of the index. Unusually warm weather in February gave way to colder conditions, resulting in a spike in demand for heating in March. Manufacturing output fell slightly in March, led by a large step-down in the production of motor vehicles and parts.
  • In the week ended April 15, the advance figure for seasonally adjusted initial claims was 244,000. The advance seasonally adjusted insured unemployment rate fell to 1.4%. The advance number for the week ended April 8 was the lowest level for insured unemployment since April 15, 2000.
Eye on the Week Ahead
Initial estimates for the first-quarter GDP are out at the end of the week. Final figures for the fourth quarter revealed that the economy increased at an annual rate of 2.1%. A first-quarter rate at or below 2.0% may sway the Fed to hold interest rates at their current levels when the Committee next meets during the first week of May.
Given the positive signs in the economy, we will still be cautious about longer term debt securities and remain positive on domestic and international equities.
Have a great week!