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Market Commentary

For the week of May 23, 2016

 

The Markets

Stocks rebounded Friday on tech stocks after the release of higher-than-expected profit forecasts from Applied Materials and a 1.1 percent increase to Apple. Friday’s rally pushed both S&P 500 and NASDAQ to weekly gains, after three and four weeks of losses, respectively. For the week, the Dow fell 0.04 percent to close at 17,500.94. The S&P gained 0.35 percent to finish at 2,052.32, and the NASDAQ climbed 1.10 percent to end the week at 4,769.56.

 

Returns Through 05/20/16

1 Week

YTD

1 Year

3 Year

5 Year

Dow Jones Industrials (TR)

-0.04

1.62

-1.70

7.11

9.71

NASDAQ Composite (PR)

1.10

-4.75

-5.96

10.91

11.21

S&P 500 (TR)

0.35

1.31

-1.31

9.48

11.39

Barclays US Agg Bond (TR)

-0.62

3.24

3.46

2.54

3.39

MSCI EAFE (TR)

0.31

-3.20

-13.31

-0.21

2.07

 

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars. 

 

Bad Debt — Publicly held debt of the United States ($14 trillion) is equal to 76 percent of the size of the U.S. economy. Publicly held debt of China ($28 trillion, stated in dollars) is equal to 200 percent of the size of the Chinese economy (source: Financial Times, BTN Research).

 

Large Tax Receipts — The U.S. government took in $438.4 billion of tax receipts in April 2016, the second largest monthly total ever collected in U.S. history (source: Treasury Department, BTN Research).

 

Eleven Billion Each Day — The U.S. government is projecting fiscal year 2016 spending of $3.951 trillion, equal to $10.8 billion of daily outlays (source: Treasury Department, BTN Research).

 


WEEKLY FOCUS – Standing Tall Against Terror

 

Paris. San Bernardino. Istanbul. Brussels. Lahore. Over the past year, it seems the only thing to interrupt constant U.S. election coverage has been breaking news of violent terror attacks from around the globe. The most recent possible attack being linked to the lost EgyptAir Flight MS804, which disappeared over the Mediterranean on May 19. Terrorists hope to create widespread fear and wreak economic damage, and the cost of lost lives can’t be measured. Fortunately, the violence seems to be having less financial impact with time. Investors appear to be standing stronger instead of rushing to sell following such attacks.

 

According to a March USA Today article by Adam Shell, “The impact of terror attacks on financial markets has become less dramatic and far more muted in recent years, compared with the massive sell-off following the Sept. 11 attacks in 2001, when the broad U.S. stock market tumbled nearly 5 percent in the first trading day after the attack and was down nearly 12 percent five trading days after planes hijacked by terrorists brought down the twin towers at the World Trade Center in New York."

 

Terror attacks can impact the global economy by affecting consumer confidence, tourism and defense security expenses. These effects are similar to those seen following other unexpected disruptions, such as natural disasters (earthquake, tsunami, etc.) or a man-made calamity like an oil spill. When these events occur, anxious investors’ concerns often cause initial declines in the markets. Eventually, however, markets typically swing back.

 

Multiple studies of past market data have shown the longer you have money invested in the market, the less volatility your portfolio experiences. That’s because time allows the highest highs to offset the lowest lows. For example, BTN Research reported the total market capitalization of the U.S. stock market was $23.7 trillion as of March 31. At its bear market low on March 9, 2009, the country’s total market capitalization was $8 trillion. That’s nearly triple the bottom in less than a decade. While periods of market negativity, like those following terror attacks, should get your attention, you don’t need to act. They are often temporary and minor in the grand scheme of things.

 

Don’t let fear affect your plan. Patience, confidence and a well-balanced portfolio can help you manage market fluctuations better – regardless of their cause. To further discuss what effects global terrorism may have on the markets or your personal portfolio, call our office today.

 

 

 * The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and PacificBasin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America. SAI#1437079.1

 

 

  

CBT FINANCIAL CENTER

Lyn Moore 417-659-7852
Johnny E. Brown 417-455-8212
Barbara Snow 417-455-8261

Not FDIC Insured. No Bank Guarantee. May Lose Value
Not Insured by any Government Agency. Not a Deposit

Securities offered through Securities America Inc.,
Member FINRA / SIPC.
Services offered at CBT Financial Center in Neosho or 3131 East 7th St, Joplin, or by appointment at other branch locations.
Johnny E. Brown, Lyn Moore, and Barbara Snow, Registered Representatives.
Advisory services offered through Securities America Advisor, Inc., Johnny Brown and Lyn Moore, Financial Advisors.
CBT Financial Center, Community Bank & Trust and Securities America are unaffiliated.

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