All three major U.S. equity averages advanced to new record-setting highs on Friday after Republican Senators Marco Rubio and Bob Corker announced they would vote in favor of the GOP-led tax reform bill. The two senators were previous holdouts and with their backing, the bill is expected to pass both chambers of Congress this week. Prior to Friday’s last minute tax bill negotiations, uncertainty over the fate of tax reform had earlier caused investors to pare their equity risk appetites. Outside of the back-and-forth tax negotiations, Friday’s trading volume was elevated by the quarterly quadruple index options expiration, with overall share volume 74% higher than the 30-day average ahead of the event. The week got off to a rocky start after an ISIS-sympathetic bomber detonated a pipe bomb in lower Manhattan on Monday. Wall Street largely ignored the incident when it was revealed the bomb failed to cause any fatalities. Investors instead focused on favorable macro-economic conditions.
For the week, the S&P 500 gained +0.95%, the Dow Industrials rose +1.33% and the MSCI EAFE (developed international) advanced +0.14%.
Impact of Final Version Tax Plan -- Market Watch
Chart 1 illustrates that the year-over-year change in temporary help employment was 3.9% in November, which is higher than 42% of all months over the past 20 years. The pace of temporary help employment growth has weakened modestly over the last six months, but is still in line with its 12-month average and continues to signal a healthy labor market. Moreover, average monthly gains this year in temporary help employment are outpacing 2016. This year, temporary help employment has increased by an average of 12,200 per month compared to an average monthly increase of 2,600 in 2016.
Temporary help employment figures are viewed favorably if they are positive and trending higher. Changes in temporary help numbers are often used as a predictor of changes in future employment. Historically, temporary help employment falls into negative territory heading into a recession and climbs back to positive territory in the early part of an economic expansion.
Some materials are chosen by the Cetera Investment Management team and summarized by Jason Vitucci who is not affiliated or registered with Cetera. Cetera Investment Management provides investment management and advisory services to a number of programs sponsored by First Allied Securities and First Allied Advisory Services. Cetera Investment Management individuals who provide investment management services are not associated persons with any broker-dealer. International investing involves additional risk, including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets. Investing in companies involved in one specified sector may be more risky and volatile than an investment with greater diversification.