July 20 2016
“Start your engines,” was not in the Department of Labor (DOL)’s June Employment Report Summary, but it may as well have been. A positive jobs report revved investor optimism and sent U.S. stock markets sprinting higher last week.
Job growth was strong in June with 287,000 new jobs created. That helped soothe worries raised by a less than stellar May jobs report. The Wall Street Journal wrote:
“A powerful rebound in hiring last month eased fears about an economic downturn as the U.S. expansion enters its eighth year, putting the nation on solid footing to absorb global shocks and market turbulence.”
Investors appeared to agree the U.S. economic growth would continue apace. The American Association of Individual Investors (AAII)’s Investor Sentiment Survey reported bullish sentiment – the expectation stock prices will rise over the next six months – increased by 5.8 percentage points last week to 36.9 percent. That’s just the second time since November 2015 bullishness has stayed above 30 percent for two weeks in a row.
Money managers didn’t sit in the stands. The National Association of Active Investment Managers reported active managers increased their stock market exposure to 97 percent last week, which is the highest since the group began calculating the measure, according to Bloomberg.
Investors’ enthusiasm was fortified by positive earnings reports and helped some markets reach new highs. The Dow Jones Industrial Average finished Friday at a record high, according to Reuters, and Bloomberg said, “…the S&P 500 Index closed at record highs on four consecutive days, something that hadn’t happened since November 2014.”
The coup in Turkey on Friday threw a wrench into the works. Demand for safe haven assets increased, according to Bloomberg. It wouldn’t be a surprise if markets pulled back to assess.
- Data as of 7/15/161-WeekY-T-D1-Year3-Year5-Year10-Year
- Standard & Poor’s 500 (Domestic Stocks)0.0150.0580.0260.0870.1040.058
- Dow Jones Global ex-U.S.3.70.4-9.5-0.9-10.4
- 10-year Treasury Note (Yield Only)1.6NA220.127.116.11.1
- Gold (per ounce)-224.915.61.1-3.57.4
- Bloomberg Commodity Index0.410.4-12-12.3-12-6.8
- DJ Equity All REIT Total Return Index0.415.9221.412.612.57.7
*Indices are unmanaged and investors cannot invest directly in an index.
*Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.
*S&P 500, Gold, Dow Jones Global ex-Us, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend).
*The DJ Equity All REIT Total Return Index does include reinvested dividends.
*All investments involve risk – coins and bullion are no exception. The value of the bullion and coins is affected by many economic circumstances, including the current market price of bullion, the perceived scarcity of the coins and other factors. Therefore, because both bullion and coins can go down as well as up in value, investing in them may not be suitable for everyone. Since all investments, including bullion and coins, can decline in value, you should understand them well, and have adequate cash reserves and disposable income before considering a bullion or coin investment.