Market Digest – Week Ending 01/06/2016
Stocks moved higher in the first week of 2017. Comments from the Fed indicated concern over uncertainty related to Trump and suggested future rate increases may be delayed. A jobs report released Friday showed the US added 156,000 jobs last month, down from 204,000 jobs added in November. However, average hourly earnings increased 10 cents, pushing the year-on-year increase in average hourly earnings to 2.9 percent, the largest increase since June 2009. The official unemployment rate ticked up to 4.7 percent.
S&P 500: 2,277 (+1.7%)
FTSE All-World ex-US: (+2.4%)
US 10 Year Treasury Yield: 2.42% (-0.02%)
Gold: $1,173 (+1.8%)
USD/EUR: $1.053 (+0.1%)
• Tuesday – Tesla sales rose 27% in Q4, but narrowly missed its goal of delivering 80,000 vehicles in 2016.
• Tuesday – The ISM purchasing managers index rose to 54.7, suggesting strong manufacturing activity.
• Wednesday – Fed minutes cited considerable uncertainty around Trump’s policies. Bond yields fell as result.
• Thursday – A Chinese crackdown on wagers against the yuan led to the largest ever two day gain against the dollar.
• Thursday – A Verizon EVP said the company is evaluating the data breeches at Yahoo and is unsure if it will proceed with the planned $4.8 billion acquisition.
• Friday – The US intelligence community said Russian President Putin ordered an influence campaign aimed at helping Trump win the election.
• Friday – December jobs growth was lower than expected but wages posted the fastest gain since 2009, pointing to a tight labor market.
• Friday – Volkswagen was said to be near to resolving a criminal investigation and will pay a penalty of several billion dollars.
U.S. capital markets ended on a good note to start the first week of the year but we do expect volatility in 2017 and plenty of pundits to make incorrect calls and projections.
On the financial planning front, this is the best time of the year to reassess savings to retirement accounts and employer sponsored plans. The annual contributions limit for employees participating in 401k, 403b and most 457 plans remains $18,000 for 2017. The 401k catch-up contribution limit for employees 50 or older also stayed the same at $6,000 for 2017.
SEP IRA contributions for the year have ascended from $53,000 to $54,000 and SIMPLE IRA limits stayed the same at $12,500 for 2017. IRA and ROTH IRA contributions limits are at $5,500 for 2017 with an additional $1,000 contribution for individual 50 or over. You can still make 2016 contributions until April.
HSA contribution limits increase to $3,400 for singles and $6,750 for families. If you haven’t already, be sure to check with your HR department and ensure you contribution rates are what you want. If you’re not maxing your 401k, consider even a small incremental increase in the rate you contribute – it can go a long way.
Amin Dabit, CFP®
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