Positive quarter for global markets
Despite some early volatility, September ended up being a positive month for most financial markets. This capped off a solid quarter where markets also saw gains across the board. Here in the U.S., the Dow Jones Industrial Average led the pack with a 2.16-percent gain for September. The S&P 500 Index was up 2.06 percent for the month, and the Nasdaq Composite gained 1.11 percent. On a quarterly basis, the Nasdaq had the best return, climbing 6.06 percent. The Dow was right behind with a 5.58-percent return for the quarter, while the S&P 500 finished up 4.48 percent.
Hurricanes cloud housing outlook
Beginning in mid-August with Hurricane Harvey, the Eastern Seaboard saw three major storms touch down in U.S. territory. The damage they caused to both people and property was tremendous, and we are just starting to see some of the economic impact.
Figure 1. Annual Change in Supply of Houses in the U.S., 2007—2017
Consumer, business confidence continue
While homebuilder confidence declined slightly in August, consumer and business confidence remained strong. Consumer sentiment, as measured by the Conference Board and University of Michigan surveys, remained near year-to-date highs. In fact, the Conference Board survey currently sits at its second-highest level since 2001.
Politics takes center stage
Given the continued strength of the U.S. economy, as well as the synchronized expansion around the world, the major source of market risk comes from politics. The next story we’ll want to pay attention to is the Trump administration’s tax reform proposal and the effects any changes to the tax code could have on the economy. From an economic perspective, there are more opportunities than risks here. And with the deferral of the debt ceiling issue to December, political risks in the U.S. are lower than they have been in recent months.
Despite the risks, economy resilient
Although very real risks are out there, they have had remarkably little effect on the economy and the financial markets. As long as the economic fundamentals remain sound, growth tends to continue, and that’s what we’re seeing today.