Market Recap – January 20, 2017

Stocks Down in Inauguration Week

  • Donald Trump inaugurated as 45th President
  • Mixed earnings see markets up today, down on the week
  • What to expect going forward

Donald Trump was inaugurated as the 45th President of the United States this afternoon. This was a very contentious election yet our constitutional republic managed to peacefully transfer power for the 45th time over the last ~240 years. From an investing standpoint, I see some reasons for optimism and some areas for concern with the new administration. Significant reforms to corporate taxes and regulation strike me as a positive while actions that seek to limit international trade through tariffs or others mechanisms seems dangerous.

While the inauguration dominated the news this week (CNBC hasn’t talked about stocks all day) there were some interesting earnings reports. Target downgraded its forecast and its shares are down almost 10% since the announcement. Holiday sales seem to have been a disappointment to many brick and mortar retailers. GE disappointed investors today while Procter & Gamble exceeded expectations and raised future guidance. Both GE and P&G seemed optimistic about future US growth, but were both cautious to comment too much on the incoming administration. Many companies seem to want to see details instead of talking points before commenting or adjusting business plans. This seems to be the best course for investors as well. There’s been a lot of talk out of the incoming Trump administration, some of it contradictory. Now that’s he’s officially the President, we will hopefully start seeing policy specifics and can make investment decisions as such.

The Dow and S&P 500 were both up today, but finished down on the week. The Dow was down 0.3% while the S&P 500 was down 0.1%. This is the second consecutive week the indices declined, but both are still up slightly on the year.

There was an article in Forbes this week about a phishing scam that is happening on Gmail. A phishing scam is how John Podesta’s email was accessed during the election. It got me thinking about online security for your investment and other financial websites. E-trade, and many other financial firms, offer what is called a 2-step authentication process. I set it up on all my accounts this week and encourage you to do the same. Systems differ, but with this level of security, you either receive a text message with a code or use a third party app to create a temporary code to enter along with your password when you login. This means that even if your login and password are compromised, someone won’t be able to access your account unless they also have access to your cell phone. In E-trade, you go to Accounts>My Profile>Security & Passwords. Then click the ‘Manage Secure ID’ link and follow the directions.

Oil declined slightly this week, closing down 0.2% to $52.33/barrel. The yield on the 10-yr Treasury increased, closing at 2.47% from 2.39% a week ago. The average rate on a 30-yr mortgage declined for the 3rd straight week, moving to 4.09% from 4.12% a week ago.

Close Weekly YTD
Dow Jones 19,827.25 (0.3%) 0.3%
S&P 500 2,271.31 (0.1%) 1.5%
Oil 52.33 (0.2%) (2.9%)
10-yr Treasury (∆ in bps) 2.47 8 2

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