Political stories dominated the headlines during the 2nd quarter, but investors were the beneficiaries of another set of solid gains for the major market indices although the ride was somewhat bumpy. Stocks were strengthened by good corporate earnings, the prospect of possible tax cuts, and strong economic numbers in the foreign markets. This extended gains from the 1st quarter, with the Dow’s YTD change at 8.03% closing at 21,350. The S&P YTD change through 6/30/17 was 8.24% closing at 2,423 while the NASDAQ was up 14.07% closing at 6,140 for the same time period.
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Market Recap
Stocks rose solidly in the 1st quarter of 2017 as momentum from November’s presidential election kept the rally going. Led by the technology sector, which had done very little after the election, equities started the year with very strong gains. Despite backing off of all-time highs, the Dow rose 4.6% to close at 20,663, marking its sixth straight quarter of gains.
Investing & Economic Commentary
The same populist sentiment that created Brexit earlier this year in Britain carried through in the American general elections yesterday. Very few polls had given Donald Trump any chance of winning the presidency, yet as the night wore on, it became increasingly obvious that America was voting for a dramatic change in course and against the status quo of American politics.
This morning, the government reported that the economy grew at an annual rate of 2.9% last quarter. This is a little stronger, but in line with, what we expected. We had said earlier that the slowdown experienced in the first half of the year appeared to be due to temporary factors, and that the bulk of the indicators we look at were pointing towards an acceleration in the second half of the year.
Financial Planning
As a kid, my favorite movies were non-stop action with actors like Arnold, Jean Claude Van Damme, Sylvester Stallone, and Jackie Chan. The Terminator franchise was my favorite, but I never imagined our society would get to a point where computers, robots, and artificial intelligence (AI) was a reality. Here we are. We practically live on our computers (or smartphones), tireless robots handle jobs that took thousands, and AI is right around the corner.
According to the National Philanthropic Trust, Americans gave $373.25 billion in 2015. While giving to the less fortunate is admirable, many donors also see charity as a tax deduction—a way to reduce their ongoing support of Uncle Sam. If Congress is going to offer, there is no problem with trying to minimize tax liabilities while supporting your favorite causes.
