The U.S. markets closed out the 3rd quarter and posted strong year-to-date (YTD) returns. The S&P 500 closed out the quarter up 20.5% YTD (including dividends), while the Dow Jones Industrial Average posted gains of 17.5% YTD (including dividends).
The start of the month means a lot of economic data on the horizon. This week the ISM Manufacturing Index and the Non-Manufacturing Index came in lower than expected; concerning some analyst that the global slowdown and trade dispute is pulling down the broader U.S. economy. Although the headline numbers disappointed, the Non-Manufacturing Index is still showing an expansion (a reading above 50 means the economy is growing, while a reading below 50 shows the economy is shrinking).
It is much too early to throw in the towel and declare the economy will contract. These types of headlines can move the markets in the short-term because traders are looking to profit on market swings caused by fear. However, as a long-term investor, the focus should not be on month-to-month movements of these type of indicators, but on the long-term outlook of the economy, markets, and more importantly, your personal financial plan.
The Surevest Investment Committee does look at this type of data, but in combination with other important metrics, such as the job numbers, real GDP, inflation, interest rates and the U.S. dollar, just to name a few. It is a collection of indicators that provide a better picture of the economy and so far, it continues to point that the U.S. economy is growing and that growth has been driven by the consumer.
An important data point is the job numbers, which were released this morning. They will help confirm if the consumer is still moving in the right direction. Robert Luna, Surevest CEO & Chief Investment Strategist will be on Making Money with Charles Payne discussing how the markets are reacting to the latest economic news. Tune in at 11a PST to hear Robert’s insights.