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October 6, 2014 - Gains and Growth: Contributions to a Strong Q3

| October 08, 2014
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After some market stumbles in recent weeks that erased earlier gains, stocks ended about where they started at the beginning of the quarter. However, broad economic gains mean that solid fundamentals could contribute to market upside later this year. For the quarter, the S&P 500 gained 0.62%, the Dow grew 1.29%, and the Nasdaq added 1.93%.[1] What are some of the factors that contributed to strong market performance in Q3? After a very slow start to the year, economic growth rebounded in the second quarter, giving investors confidence that the economic recovery was still healthy. The latest estimate of Q2 gross domestic product (GDP) growth showed that the economy grew 4.6%;[2] while official Q3 numbers aren't out yet, some estimates indicate that the economy may have slowed slightly in the past three months, but could still clock in a healthy 3.0% gain.[3] The labor market made great strides last quarter, adding 671,000 new jobs in the past three months. In September, hiring accelerated and the jobless rate reached a six-year low of 5.9%.[4] To compare: In September of 2013, the unemployment rate stood at 7.2%, and the labor market added just 430,000 jobs.[5] On the other hand, wage growth seems to be frozen, indicating that many Americans are failing to see income gains that could lead to greater consumer spending.[6] Strong corporate profits coming off of the second quarter helped boost markets by showing that demand is improving across many sectors. Even better, Q3 guidance was modestly higher, indicating that corporate leaders felt more positive about their chances going into the second half of the year.[7] We'll know whether their optimism was merited once Q3 earnings reports are released. What could act as headwinds in the weeks and months to come? Geopolitical issues continue to drag on market performance as the situation in Ukraine continues to simmer and parts of the Middle East roil with violence. Since these areas play key roles in global petroleum and natural gas production, supply disruptions could have a serious impact on fuel prices. Europe and Japan continue to struggle with stubbornly weak economic growth and low inflation, prompting calls for additional central bank activity. If these major U.S. trading partners continue to experience trouble, it could weaken market outlooks this year. The Federal Reserve was a big player last quarter, and its monetary policy decisions will likely impact market activities in the coming weeks and months. The current round of bond purchases are scheduled to end in October, bringing the Fed's quantitative easing programs to a halt.[8] Investors are now turning their attention to the question of when the Fed will begin raising interest rates, and speculations will likely lead to further market volatility. Markets have been running high, with multiple indexes reaching new records in the third quarter, which can sometimes presage a pullback as investors pause to take stock of the market environment. Is a pullback certain? Definitely not. Bottom line: Domestic economic fundamentals are strong going into the final three months of the year. As earnings start trickling in, solid performances could translate into further market upside. As always, we recommend staying focused on long-term goals instead of short-term volatility and market performance. ECONOMIC CALENDAR: Tuesday: JOLTS Wednesday: EIA Petroleum Status Report, FOMC Minutes Thursday: Jobless Claims Friday: Import and Export Prices, Treasury Budget Gray Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized. Sources: Yahoo! Finance and Treasury.gov. International performance is represented by the MSCI EAFE Index. Corporate bond performance is represented by the DJCBP. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. HEADLINES: U.S. auto sales rise. After a sharp increase in August, sales of cars and light trucks rose on big Labor Day discounts in September. While the higher trend is good news for the industry, price cuts and incentives will chip away at company profits.[9] Trade gap shrinks on low oil prices. The gap between imports and exports dropped in August as lower oil prices caused the overall cost of imports to fall. This is good news for consumer spending as lower import costs puts dollars in consumers' wallets.[10] Factory orders drop in August. As expected, orders for manufactured goods plummeted 10.0% in August, erasing July gains. The July jump was driven by a one-off surge in aircrafts; stripping out the volatile transportation category, core orders were down slightly by 0.1%.[11] Consumer confidence drops sharply in September. After hitting a seven-year high in August, confidence among American consumers hit a speed bump as they worried about jobs and income growth. However, consumers were still upbeat about the future, hopefully indicating that consumer spending won't take a hit in the months to come.[12] Gray Quote Of The Week Fountain Pen "Either you run the day, or the day runs you." - Jim Rohn Recipe Of The Week Fork and Knife Fruit and Nut Dessert Focaccia Store-bought pizza dough makes this delicious dessert easy to make. Ingredients: Serves 4 1 refrigerated white or whole wheat pizza dough 2 cups seedless grapes, blueberries, or other fresh berry ½ cup pine nuts, walnuts, or almonds, chopped 4 tablespoons honey 8 oz package of cream cheese ½ teaspoon vanilla Oil or spray for the pan Directions: 1.Preheat oven to 425°F. 2.Roll the pizza dough into two rounds and place each on a greased baking sheet. 3.Beat together the honey, cream cheese, and vanilla until thoroughly combined. 4.Using a spatula, spread the mixture across each round of dough. 5.Top each focaccia with half of the fruit and nuts. 6.Bake 20 to 25 minutes, rotating pans halfway through, until the focaccia is golden brown. 7.Serve warm. Recipe adapted from Kate Merker and Sara Quessenberry | RealSimple.com[13] Gray Tax Tips Document Get Helpful IRS Tips on Social Media Social media isn't just for connecting with family, friends, and your favorite financial professional. The IRS also uses social media to distribute important tax information and help you stay on top of your taxes. •The IRS uses Twitter to tweet tax-related tips, news, and more. Follow them at @IRSnews and @IRSenEspanol. The Taxpayer Advocate Service tweets from @YourVoiceAtIRS. •IRS2Go is a free app where you can check your refund status, get tax updates, or follow the IRS on Twitter. You can download it free from the iTunes app store or the Google Play Store. •The IRS YouTube Channels offer short videos on many tax topics. Videos are available in English, Spanish, and ASL. Tip courtesy of IRS.gov[14] Golf Tip Golfer Judge Distances Correctly If you don't know how to judge distances well, your short game will suffer. Here's a great drill for improving your depth perception. Tee up a ball a moderate distance away from the hole. Evaluate the shot and set up as you normally would. Then, close your eyes and walk toward the hole with your putter in your hand. Stop and point at where you think the hole is. Did you get it right? If not, repeat the drill until you can accurately judge the distance. Tip courtesy of Dan Martin, PGA | Golf Tips Mag[15] Healthy Lifestyle Medical Cross Start Your Morning Slowly While the early bird may get the worm, starting your morning too quickly may be hard on your health. Researchers at Harvard University found that the risk of a heart attack is highest in the morning when blood vessels are constricted after a long sleep. Instead of jumping out of bed every morning, consider taking your time and enjoying a leisurely pace. Incorporating some easy stretches and a short meditation can help you ease into your day and boost your mental and physical health. Tip courtesy of AARP[16] Green Living Leaf Use Aerators to Reduce Water Usage How much water do you really need to complete simple household tasks? Probably less than you think. Similar to a low-volume showerhead, a faucet aerator is a simple gadget that screws onto the end of a faucet and reduces the amount of water that comes out. Your local home improvement or hardware store should stock several sizes. Look for a 2.0 GPM aerator for the kitchen faucet and a 1.0 GPM version for your bathroom sinks. Tip courtesy of Seattle PI[17] Share the Wealth of Knowledge! Please share this market update with family, friends, or colleagues. If you would like us to add them to our list, simply click on the "Forward email" link below. We love being introduced! Gray Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Diversification does not guarantee profit nor is it guaranteed to protect assets. The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896. The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia. The Dow Jones Corporate Bond Index is a 96-bond index designed to represent the market performance, on a total-return basis, of investment-grade bonds issued by leading U.S. companies. Bonds are equally weighted by maturity cell, industry sector, and the overall index. The S&P/Case-Shiller Home Price Indices are the leading measures of U.S. residential real estate prices, tracking changes in the value of residential real estate. The index is made up of measures of real estate prices in 20 cities and weighted to produce the index. The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market. Google Finance is the source for any reference to the performance of an index between two specific periods. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. You cannot invest directly in an index. Consult your financial professional before making any investment decision. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors. These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative, Broker dealer or Investment Advisor, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information. By clicking on these links, you will leave our server, as they are located on another server. We have not independently verified the information available through this link. The link is provided to you as a matter of interest. Please click on the links below to leave and proceed to the selected site. 1 https://www.google.com/finance?chdnp=1&chdd=0&chds=0&chdv=1&chvs=Linear&chdeh=0&chfdeh=0& chdet=1412107200000&chddm=25024&chls=IntervalBasedLine&cmpto=INDEXDJX:.DJI;INDEXSP:.INX& cmptdms=0;0&q=INDEXNASDAQ:.IXIC&ntsp=1&ei=vjYxVLCZHIOVwQOehoHwAg 2http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm 3http://www.cnbc.com/id/102037335 4http://www.bls.gov/news.release/empsit.nr0.htm 5http://www.bls.gov/news.release/archives/empsit_10222013.pdf 6http://www.reuters.com/finance/economy 7http://www.zacks.com/commentary/33730/bulk-of-q2-earnings-now-behind-us 8http://www.cnbc.com/id/102009066 9http://www.cnbc.com/id/102049247 10http://wsj-us.econoday.com/byshoweventfull.asp?fid=461195&cust=wsj-us&year=2014&lid=0&prev=/byweek.asp#top 11http://www.cnbc.com/id/102053585 12http://www.usatoday.com/story/money/business/2014/09/30/consumer-confidence-september/16453621/ 13http://www.realsimple.com/food-recipes/browse-all-recipes/grapepine-nut-dessert-focaccia-recipe 14http://www.irs.gov/uac/Newsroom/Use-IRS-Social-Media-Tools 15http://www.golftipsmag.com/instruction/putting/lessons/use-your-senses.html#.VDEfuCmSxt8 16 http://www.aarp.org/health/healthy-living/info-07-2013/things-to-do-bedroom-activities.html#slide3 17http://www.seattlepi.com/news/article/52-tips-for-living-green-1269861.php
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