Telemus Weekly Market Review

October 30 – November 3, 2017

The equity market moved higher once again last week, with all three major indices settling at fresh record highs. The tech-heavy Nasdaq led the charge, adding 0.94%, while the Dow and the S&P 500 climbed 0.45% and 0.26%, respectively. Small caps underperformed, sending the Russell 2000 lower by 0.89%.

Some of the week’s most notable headlines came out of the nation’s capital, including details on the House’s tax reform bill, which were released on Thursday. Highlights of the bill include an immediate–and permanent–reduction in the corporate tax rate from 35.0% to 20.0%, a repeal of state and local tax deductions–with the exception of a $10,000 limit for property taxes, a limit for mortgage interest deductions on new home loans of less than $500,000 (adjusted from $1,000,000 currently), and no major changes to 401(k) tax laws.

Stocks initially sold off in reaction to the bill, but quickly bounced back.

Elsewhere in Washington, President Trump nominated Fed Governor Jerome Powell for the position of Fed Chair, and the Federal Open Market Committee unanimously voted to leave the fed funds target range at 1.00%-1.25%, as expected. The U.S. central bank reiterated its belief that the economy will continue to expand at a moderate pace and said nothing to alter the market’s expectation for a rate hike in December; the CME FedWatch Tool places the chances of a December rate hike at 100.0%, up slightly from 99.9% last week. The 10 year U.S. Treasury note closed at 2.33% down about 7 basis points from last Friday’s close.

The Employment Situation Report for October crossed the wires on Friday, showing below-consensus nonfarm payrolls, nonfarm private payrolls, and average hourly earnings. Still, the market took the report in stride as it confirmed that the labor market is still strong, but that strength hasn’t resulted in a pick up in wages–and thereby inflation.

As for earnings, several tech heavyweights reported their quarterly results this week, including Apple and Facebook. The two companies finished the week higher, adding 5.8% and 0.6%, respectively, after both beat earnings and revenue estimates. The S&P 500’s technology sector finished at the top of the week’s sector standings.

The energy sector also outperformed last week, moving in tandem with the price of crude oil, which jumped to $55.70 a barrel in NYMEX trading marking its highest close since the start of the year.

On the downside, the consumer discretionary, health care, industrials, and materials sectors struggled ending the week with losses. Within the industrial group, transports showed particular weakness, sending the Dow Jones Transportation Average lower. The telecom services group finished at the very bottom of the leaderboard once again, extending its 2017 loss to 17.4%.

October 30 – November 3 Economic Calendar

  • Monday
  • William Dudley Speaks
    12:10 PM ET
  • TD Ameritrade IMX
    12:30 PM ET
  • Redbook
    8:55 AM ET
  • JOLTS
    10:00 AM ET
  • Consumer Credit
    3:00 PM ET
  • Tuesday
  • NFIB Small Business Optimism Index
    6:00 AM ET

  • Gallup US ECI
    8:30 AM ET

  • Redbook
    8:55 AM ET
  • JOLTS
    10:00 AM ET
  • Consumer Credit
    3:00 PM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Redbook
    8:55 AM ET
  • JOLTS
    10:00 AM ET
  • Consumer Credit
    3:00 PM ET
  • Thursday
  • Jobless Claims
    8:30 AM ET

  • Bloomberg Consumer Comfort Index
    9:45 AM ET
  • Wholesale Trade
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Friday
  • Consumer Sentiment
    10:00 AM ET
  • Baker-Hughes Rig Count
    1:00 PM ET
  • Treasury Budget
    2:00 PM ET
  • JOLTS
    10:00 AM ET
  • Consumer Credit
    3:00 PM ET

PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. This market commentary is a matter of opinion and is for informational purposes only.  It is not intended as investment advice and does not address or account for individual investor circumstances.  Investment decisions should always be made based on the client’s specific financial needs, goals and objectives, time horizon and risk tolerance.  The statements contained herein are based solely upon the opinions of Telemus Capital, LLC.  All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice. Information was obtained from third party sources, which we believe to be reliable, but not guaranteed.