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Newsletter: In the Markets – Week-Ending May 26^th, 2017

Crystal Brook Advisors

We Make Financial Planning Crystal Clear™

United States: Much like earlier reported new home sales, the slight drop in existing home sales reported for April does little to dispel the notion that the housing market is building strong momentum. (1)  While overall sales fell 2.3 percent in April, the decline followed a solid 4.2 percent rise in March. Sales are up on a year-to-year basis for every month this year. The earlier than usual start to spring home buying left fewer homes for April buyers. (1)

Europe: The pan-European Stoxx 600 finished the session up 0.22 percent, with most sectors closing in the black. The U.K.’s FTSE 100 failed to hold onto gains, ending 0.15 percent down, while Germany’s DAX popped 0.31 percent. (2)  This positive sentiment in Europe followed economic data showing the eurozone keeping up a strong growth rate. The May flash composite PMI stood at 56.8, matching the six-year high registered in the previous month. (2)

Asia: The Regional Economic Outlook for Asia and the Pacific estimates growth for the region to increase this year to 5.5 percent from 5.3 percent in 2016. Growth will remain strong at 5.4 percent in 2018, as the region continues to be the leader of global growth. (3)  The report also cites the more favorable global environment with growth accelerating in many major advanced and emerging market economies—notably the United States and commodity exporters—as supporting Asia’s positive outlook. Risk appetite remains strong in global financial markets despite some bouts of capital flow volatility in late 2016. (3)

Latin America: Economic growth in Latin America and the Caribbean in 2016 was the third-lowest in 30 years—contracting by 1 percent after stagnating in 2015. Growth was held back by weak domestic demand from lower commodity prices, an ongoing fiscal and external adjustments in some countries, and other country-specific domestic factors. (3)  The IMF forecasts growth to expand by 1.1 percent this year and 2 percent in 2018. Over the medium term, growth is expected to remain subdued at 2.6 percent. (3)

Monday 5/22  

• Strong gains for technology companies like software and chip makers helped lead U.S. stocks higher Monday. Defense contractors also climbed as the market continued to bounce back from a bout of turbulence last week. (4)

Tuesday 5/23

• The U.K. FTSE 100 UKX, -0.02% closed 0.2% lower at 7,485.29, breaking a two-day winning run. (5)
• The index had been trading slightly higher earlier in the day, but was sent lower as the pound GBPUSD, -0.7341% spiked to $1.3034 just before the European stock markets closed. A stronger sterling tends to weighed on the FTSE as about 75% of the revenues for the index’s companies are generated overseas. (5)

Wednesday 5/24

• S. stock indexes crept to small gains early Wednesday, as the market awaited the minutes from the Federal Reserve’s May 2 and 3 meeting. FANG stocks such as Facebook (FB) and Amazon (AMZN) were mostly higher. (6)

Thursday 5/25

• The Dow Jones Industrial Average (DJI) gained 0.4% to close at 21,012.42. The S&P 500 rose 0.3% to a record close at 2,404.39. Both the Dow and the S&P 500 posted gains for a fifth consecutive session on Wednesday, marking their longest winning streak since February. The tech-laden Nasdaq Composite Index advanced 0.4% to close at 6,163.02. A total of around 6.1 billion shares were traded on Wednesday, lower than the last 20-session average of 6.8 billion shares. The fear-gauge CBOE Volatility Index (VIX) traded near 9.89. Advancers outnumbered declining stocks on the NYSE by a 1.30 to 1 ratio. (7)

Friday 5/26

• S. stocks advanced on Friday, driven by Apple, as a sense of calm prevailed over Wall Street in a week that was dominated by political uncertainty surrounding Donald Trump’s presidency. (8)

Contributor: Thomas Padula

Source: (1) Wells Fargo Economic Group, (2) CNBC, (3) International Monetary Fund, (4) Press Herald, (5) Market Watch, (6) Investor’s Business Daily, (7) NASDAQ, (8) Business Insider