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News and Insights » Market Review, Week Ending August 11, 2017

Market Review – August 11, 2017

Last week there was obvious market impact of rising tensions between the U.S. and North Korea. For starters, the S&P 500® Index was down roughly 1.3%. From a historical perspective, that’s actually not a big drop given the normal volatility of equity markets. In the face of what’s been an extraordinary period of calm lately for U.S. markets, however, it’s a notable move in that it’s the biggest weekly decline for the index since March. The clash between U.S. and North Korean leaders also weighed on both emerging and European markets. It is a dynamic situation, and things could quickly change, but for the time being, our broader market forecasts are unchanged.

Switching to inflation, the recently released U.S. core inflation data for July remained weak, making for five straight months of softer-than-expected data—the second-worst such period since the 1960s. The numbers continue to run consistently below the U.S. Federal Reserve (the Fed)’s 2% inflation target. Economists believe that the persistent weak core inflation data, coupled with a slew of mediocre economic growth factors, will prevent the Fed from raising interest rates through the remainder of the year.

It was also recently reported that during June, job openings in the U.S. reached their highest level since the series was established almost 17 years ago, suggesting that the labor market continues to improve 7 years into the economic expansion. With a record number of jobs available, it should be no surprise the unemployment rate has returned to its pre-crisis lows. If job openings remain at current levels, we should expect an even lower unemployment rate by year-end.

August 14th, 2017 @ 12:00am by UMAFS
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