Taper Tantrum
As a reminder, the markets and Monument Wealth Management will be closed on Thursday, July 4th. We will also have a 1 p.m. EDT closure Wednesday since it is a half day for the exchanges.
Wow, the first half of the year is over. That was fast. And while the 2nd quarter ended with a “Taper Tantrum” and some higher than usual volatility, the Dow Jones Industrial Average (DJIA) finished the first half of the year up +13.8% followed by the NASDAQ and Standard & Poor’s 500 index (S&P 500) up +12.7% and +12.6% respectively.
So after the Taper Tantrum from the previous week, a number of big wigs (and some not-so big wigs) vigorously tried to comfort markets that the Federal Open Market Committee was still highly reliant upon the economic data for reducing or even ending its bond purchases, otherwise known as Quantitative Easing or ‘QE.’
In English, that means if economic forecasts don’t unfold as the Fed expects, any QE reduction could be delayed or QE could even be increased! The strong responses from the big wigs helped slow down the drop in stocks and caused Treasury yields to back off their recent highs.
Over the past month or so, the markets have certainly been volatile. Since May 28, triple-digit daily moves in the DJIA have occurred in 19 out of last 24 sessions. Interestingly, stocks remain near their all-time highs. Remember, it’s not how smoothly you get to your goal that is the important thing in investing…it’s actually reaching your goal that’s important.
Here’s a recap of how the market did last week.
Oh Boy – It’s Earnings Season Again!
Alcoa will begin the second quarter earnings reporting season on July 8, 2013. The bar has been lowered, setting up another quarter of possible slight upside surprises supported by modest global economic growth, share buybacks, company cost controls, and low inflation. Revenue growth will probably be almost non-existent and guidance for next quarter will remain conservative. This means that the market reaction to any better-than-expected results may be muted.
Please call or email with questions.
Investment advice offered through Monument Advisory Group, LLC a Registered Investment Advisor (RIA). Securities offered through LPL Financial. Member FINRA/SIPC. Monument Advisory Group and Monument Wealth Management are separate entities from LPL Financial.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Stock investing involves risk including loss of principal. The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries, and widely held by individuals and institutional investors. The Standard & Poor’s 500 Stock Index (S&P 500) is an unmanaged capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ Composite Index measures all domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. The Russell 2000 Small Stock Index is an unmanaged index generally representative of the 2000 smallest companies in the Russell 3000 Index. The Russell 2000 is an unmanaged index generally comprised of companies with lower price-to-book ratios and lower forecasted growth values. The 2, 10 and 30 year Treasury is simply the yield at the close of the day.
(1) West Texas Intermediate crude spot price is as of end of week.
(2) London Bullion Market Association; gold fixing pricing at 3 p.m. London time.
David B. Armstrong, CFA
President & Co-Founder
Dave got into the industry when he discovered his passion for finance in his mid-20’s. He’s a combat veteran and served as an officer in the United States Marines Corps on both active duty and in the reserves, retiring at the rank of Lieutenant Colonel. While serving on active duty, Dave was unable to spend money on deployments, so he became a self-taught investor. Along with a few bucks cash as a bouncer, his investing performance grew to be good....
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