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Friday’s Financial Update 3-10-2017

Written By: Michelle Smalenberger, CFP®

As we round out another week, we are reminded of the ups and downs that can come with investing.  There were some interesting stories this week that brought about daily changes to how stocks performed.  This highlighted the importance of having a diversified portfolio that is not based on luck or chance but rather thoughtful analysis of where to invest and also where not to invest.

Early in the week, we learned about the American Healthcare Act which was brought forth as a replacement for the existing Affordable Care Act.  While it may not survive as the final version that gets put into place, there are many items that were left like providing insurance for dependents up to age 26 and some that were altered such as the removal and reimbursement of penalties charged dating back to 12/31/2015.

The energy sector saw a pull back on Wednesday of as much as 5.5% and remained soft to end the week.  The drop was largely on concerns of production freezes, OPEC, Russia and Iran.  There seemed to be a lot of speculation that production levels would move lower, but U.S. crude inventory rose by the largest amount in the latest weekly report, since record keeping began.  This renewed concern on production output and oversupply, driving a massive liquidation in energy sector investments.

A strong jobs report was given today!  Not only were there thousands of new jobs reported, but it was a much higher number than expected.  200,000 jobs seemed to be the consensus of the expected new jobs, but new jobs reported were 235,000.  More full-time than part-time jobs were added.  We even saw increases in wage growth and the expectation of that continuing throughout all of 2017.  Unemployment numbers also dropped.  The large increase of new jobs really helps us to see the effect of uncertainty that was looming over the economy and also how quickly companies are hiring again.  We may not see the same level of growth going forward, like we did in today’s job report, but growth of the employed and a decrease of unemployed is expected to continue.

The jobs report made the likelihood of an interest rate hike in March even more likely. The Fed will meet again on March 15th, so we will be looking to see what decision they announce.  Expectations are high that they will raise rates and now just whether they raise rates as expected remains to be seen.

Other global news that may be driving a bit of selling in the market is an election for The Netherlands scheduled for next Wednesday and the upcoming elections for the French and the Dutch.  These elections will be telling of the type of government that will be leading those economies.  Much like the changes we have seen here, people are paying attention to whether the populist trend will continue.

Among all the news and changes we can see, one thing remains certain: stay invested for the long-term in a diversified portfolio.  Taking a chance or an unnecessary risk without analysis or belief in your reason for investing can lead you astray and cause you to make quick changes that can ultimately hurt your portfolio over the long-term.