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Market Databank


2nd Quarter 2016


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STOCKS VOLATILE, ECONOMY STRONG

The S&P 500 index gained just 4% over the 12 months ended June 30, 2016. A collapse in profits hit energy and mining companies hard, and hurt earnings of the S&P 500. A 4% return is less than half the average annual return of about 10% on U.S. large-companies’ equities since 1926.

 


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BULL MARKET RETURNS

This is the picture of a historic bull market that went nowhere after 2014. While stock returns have crept ahead in the last five years, gross domestic product has moved at a slow but steady pace, and was expected to accelerate to a 2.4% rate in the last three quarters of 2016.

 

 


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ENERGY STOCKS CRUSHED

In the year ended June 30, 2016, three "defensive" -- utilities, telecom and consumer staples -- were leaders for the second quarter in a row. Financials were the biggest losers, followed by energy and commodities-related issues.

 


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INDEXES TRACKING ASSET CLASSES

The huge difference between the best and worst asset-class returns shows why diversification is crucial. REITs, both U.S. and global, were No. 1 in the five-years ended June 30, 2016, along with U.S. large-cap stocks. Crude oil investments lost two-thirds of their value. Commodities and gold suffered crushing losses.

 


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LEADING ECONOMIC INDICATORS

Leading economic indicators released on July 22 signaled continued growth ahead. Despite a disappointing second quarter economic growth estimate, the Conference Board’s forward-looking economic release forecast a strengthening economy for the rest of 2016, driven by the great American consumer.

 


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S&P 500 INDEX VS. EARNINGS*

Red squares show expected earnings on the S&P 500 index based on a June 29, 2016 forecast by Wall Street analysts for earnings of $118 per share in 2015, $119 in 2016, and $136 in 2017. Earnings growth is poised to propel stocks higher, unless a crisis or really bad unexpected news sets world progress back.

 

 

 

Sources: Yardeni Research, Inc. and Thomson Reuters I/B/E/S survey of consensus estimates. Standard and Poor’s for index price data through June 30, 2016.

 

 

 

 
 


1st Quarter 2016
4th Quarter 2015
3rd Quarter 2015
2nd Quarter 2015
1st Quarter 2015

This article was written by a professional financial journalist for Clark Planning & Investment Advisory and is not intended as legal or investment advice.
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