5/26/17 – Stocks Rise Ahead of Holiday Weekend

Happy Memorial Day Weekend!

Stocks had a great week heading into the holiday weekend. Some positive earnings and economic data coupled with minimal political headlines fueled the rally. On the week, the Dow gained 1.3% while the S&P 500 increased 1.4%. The stock market will be closed on Monday.

US GDP Growth – The second estimate for first quarter economic growth was revised higher today to 1.2% from the prior 0.7% estimate. While still a pedestrian figure, the first quarter is often seasonally weak and this revision will support the view that growth will bounce back during the current quarter. Many analysts are expecting 2nd quarter growth in the 3% range. The 3% growth rate is a critical level for much of the Trump economic agenda. The tax and budget plans are based on 3% annualized growth, yet we haven’t grown faster than 3% in any year since 2005.

Jobs Report – The May jobs report will be released next Friday. Investors will be closely watching to see if last month’s strength carries through to May. The jobs report will also give clues about the GDP growth discussed above. The current consensus estimate is for 170k net new jobs being created this month.

Oil moved lower this week, decreasing 1.1% to close at $49.87/barrel. The yield on the 10-yr Treasury moved slightly higher, closing at 2.25% from 2.24% a week ago. The average rate on a 30-yr fixed rate mortgage dropped below 4% this week, to 3.95% from 4.02% last week.

I hope you have a great Memorial Day weekend and take some time to remember the brave men and women who made the ultimate sacrifice for our freedom.

Close Weekly YTD
Dow Jones 21,080.28 1.3% 6.7%
S&P 500 2,415.82 1.4% 7.9%
Oil 49.87 (1.1%) (7.5%)
10-yr Treasury (∆ in bps) 2.25 1 (20)

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