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Aug 21 2014

S&P continues its march towards 2,000

Market Recap:

Stocks continued their climb on Wednesday, rising for a third day in a row as economic news remained positive and the FOMC minutes indicated a further dovish stance by the voting members. However, dissent regarding the timing of the first interest rate hike continues to grow, with more FOMC members and Fed Governors indicating that an earlier than previously thought rate hike may be in order. Given that all members of the Federal Reserve, including the more hawkish ones, have clearly stated that such moves and changes in policy will be dictated by the underlying strength in the U.S. economy as opposed to some arbitrary time period, we do not view this development as a concern.  All sectors of the S&P were higher, while Treasuries sold off slightly and commodities were mixed.

Looking Ahead:

As the S&P continues its march towards 2,000, investors will likely hear more and more discussions about a looming correction and that stocks are overvalued. While we agree that a correction is possible, we believe that given the overall strength in consumer spending, improving labor market, continued rise in manufacturing, and strong corporate earnings, that stocks will likely move higher over the next 6 to 12 months. We do caution investors to be selective in their investment choices and review balance sheets carefully to ensure that the companies have a reliable and predictable earnings stream. Moreover, historically late August and early September tend to be more volatile times for equities, as such while there might be good opportunities to deploy capital in the near term, patience will likely prove the more beneficial virtue.

Make sure to tune into Money Matters with Gary Goldberg this Saturday at 2:00 PM and Sunday at 11:00 AM on WOR 710 AM Radio to hear our latest economic and market analysis as well as interviews with some of today’s most respected business leaders. Visit our website for details.