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Volatility Returns – Weekly Commentary 5.22.17

Stocks lost ground last week following the appointment of a special counsel to probe potential Russian interference with the presidential campaign and the Trump administration (among other things). News released on Tuesday evening that President Trump allegedly asked former FBI Director James Comey to drop the investigation of former national security advisor Michael Flynn led to a market sell-off on Wednesday. Markets rebounded at the end of the week as investors focused on an economy that is generally improving and in decent shape.

For the week, both the DJIA and the S&P 500 finished lower by 0.32%. Developed international markets bucked the trend and finished higher by 1.02% for the week. Emerging markets gave back 0.63% for the week on increased nervousness surrounding government corruption charges in Brazil. Fixed income, represented by the Bloomberg/Barclays Aggregate, finished the week ahead by 0.48% following a flight-to-safety into U.S. treasuries. As a result, the 10 YR US Treasury closed at a yield of 2.23% (down 10 bps from the previous week’s closing yield of 2.33%). Gold jumped $26.50 to close at $1,252.70/oz. Oil prices ticked higher (up $2.49) on the week to close at $50.33/bbl on increased speculation that recent OPEC production cuts would be extended.

In economic news released last week, April housing starts were a bit soft while industrial production was better than expected. Initial jobless claims reported last week were slightly higher than expected, but unemployment remained at a low 4.4%. The Conference Board US Leading Index rose 0.3%, slightly below consensus.

S&P 500 earnings look to have grown by 13.9% in the first quarter as 73.3% of companies reporting beat expectations. Revenue growth in the first quarter appears to be up 7.4%, ahead of expectations for a 7.13% increase. So far, so good …

As always, we plan to look through the day-to-day news and focus on longer-term objectives.

Let’s make it a good week! 

“Give light and people will find the way.”   –   Ella Baker

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