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market spotlight | monthly review

Monthly Review

Investors seemed to take their emotional cue from a spate of mixed earnings results and economic data, waffling between enthusiasm and caution throughout the month. The Nasdaq finally recouped the losses it incurred during the technology crash 15 years ago, hitting a new record high during the third week of April. It then gave up much of that ground to end the month less than 1% higher than where it started. The S&P 500 and Russell 2000 indexes also managed to hit new highs, only to retreat again, posting a modest gain of 0.85% and a loss of 2.61%, respectively. The benchmark 10-year Treasury yield rose past the 2% mark.

Internationally, investors kept a keen eye on Greece and its ongoing discussions with creditors, as speculation continued about the country’s ability to repay its debts. Despite this uncertainty, April seemed to favor global stocks, which surged 3.30%.

Oil prices reached new highs for the year towards month’s end, with U.S. crude closing April at about $60/barrel. Gold closed the month virtually unchanged from March, at $1,183 an ounce. The dollar posted its worst monthly loss in four years, losing approximately 3.7% against a basket of six other currencies.

Market/Index 2014
Prior Month As of 4/30 Change YTD Change
DJIA 17823.07 17776.12 17840.52 0.10% .10%
NASDAQ 4736.05 4900.88 4941.42 4.34% 4.34%
S&P 500 2058.90 2067.89 2085.51 1.29% 1.29%
Russell 2000 1204.70 1252.77 1220.12 1.28% 1.28%
Global Dow 2501.66 2518.18 2601.33 3.98% 3.98%
Fed. Funds .25% .25% .25% 0 bps 0 bps
10-year Treasuries 2.17% 1.94% 2.05% 12 bps 12 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

The Month In Review

  • The Nasdaq broke its 15-year-old record set in March 2000, reaching a high of 5092.08 on April 24. The S&P 500 and the Russell 2000 also hit new highs during the month.
  • Gross domestic product rose at just 0.2% during the first quarter of 2015, according to the Bureau of Economic Analysis’s (BEA) advance estimate. That compares with a 2.2% rise in Q4 2014. Observers noted several factors that could have been at play during the winter months, including challenging weather, a strengthening dollar, disruptions in West Coast port operations, and lower oil prices.
  • In its April meeting announcement, the Federal Open Market Committee suggested that the first quarter’s slower growth was due in part to “transitory factors,” such as the ones noted above. The committee also said that, with “appropriate policy accommodation,” it expects growth to expand at a moderate pace. Noting its mandate to “foster maximum employment and price stability,” the Fed reiterated its position that the current target interest rate range of 0 to 0.25% is appropriate.
  • Despite the fact that job openings reached their highest level in 14 years in February, according to the Bureau of Labor Statistics, Good Friday (April 3) brought the unwelcome news that the U.S. economy added just 126,000 jobs in March, the weakest monthly gain since December 2013. Fortunately the markets were closed that day, and the news didn’t have a major impact on stock performance during the following week.
  • Though the Institute for Supply Management’s manufacturing index still indicated expansion, growth in the U.S. manufacturing sector slowed for the fifth straight month in March. The 51.5 reading was the lowest since May 2013; falling below 50 would mean actual contraction.
  • In its semiannual World Economic Outlook, the International Monetary Fund (IMF) projected global economic growth to be 3.5% in 2015, up 0.1% from 2014. The organization expects to see growth in advanced economies of 2.4% in 2015 vs. 1.8% last year, while growth in emerging markets is expected to drop to 4.3% this year from 2014’s 4.6%. The “moderate and uneven” growth, as characterized by an IMF official, can be attributed to “a complex set of forces,” including lower oil prices, evolving exchange rates, lower potential growth, and financial crisis legacies.
  • Amid mixed economic data released throughout the month, a few areas stood out. Consumer sentiment, as measured by the University of Michigan’s Index, rose to its second highest reading since 2007. Housing was another notable area, as reported by the National Association of Realtors®. Existing home sales jumped to the highest level in 18 months, while pending home sales remained at the highest level since June 2013. Finally, in its last weekly jobless claims report of the month, the Bureau of Labor Statistics announced that claims had reached the lowest level since April 2000.
  • Although Greece managed to make a crucial April payment on its International Monetary Fund debt, contentious negotiations bore little fruit and questions continued to swirl around the country’s ability to meet its future financial obligations. As a result, by month’s end Greek Finance Minister Yanis Varoufakis was sidelined from his role coordinating the team representing Greece in the talks and a new team was handling the discussions.

Eye on the Month Ahead

In the coming weeks, investors will likely keep a close eye on Europe to see if Greece’s new negotiators are able to make any real progress. In addition, economic data will be closely monitored to see if factors that affected the economy during the winter months were indeed “transitory.”

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes) and Barron’s (S&P 2014 total return); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/ Market Data (oil spot price, WTI Cushing, OK); (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. The U.S. Dollar Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies. Market indices listed are unmanaged and are not available for direct investment.

did you know?

Beacon affiliated advisors have access to portfolio performance fact sheets and summaries that are updated every month. When it comes time to spring clean a portfolio, these performance reports can help investors review their holdings and evaluate whether their current risk level is still appropriate for their goals. If investors are still unsure about which portfolio is right for them, Beacon offers a risk tolerance quiz to help them figure out their risk personality, developed by professors Dr. Ruth Lytton at Virginia Tech University and Dr. John Grable at Kansas State University.

bright ideas

Spring Cleaning for Your Investments:

3 Tips to Sweep Out Costly Clutter in Your Portfolios

While the weather has been about as indecisive as the markets throughout most of the country in recent weeks, spring is definitely in the air. A time for to start anew, fresh starts and spring cleaning! All too often people treat their finances like a junk drawer, an old life insurance policy here, a 401(K) account over there, which can lead to both an estate planning nightmare as well as an ineffective investment strategy. Now is time to dust off your statements and optimize your finances for your goals.

Maximize Diversification

As investing 101 will tell you, don’t put all your eggs in one basket. However, where it can become tricky is when you start with a balanced investment strategy that becomes skewed over time. For example, when sector weighting grows rapidly it can in turn assume heavy portfolio positions, leaving overexposure to losses during times of market pullback. This can be particularly dangerous in today’s volatile economy. For historical perspective, consider the technology sector, which carried a 9.4 percent weighting in the S&P 500 in 1994. Nearly five years later it had inflated to 21.2 percent of holdings just prior to the tech bubble collapse. Rebalancing your investments is an important step to help avoid this risk. In Beacon portfolios, we take an equal sector allocation approach to spread evenly across 11 sectors to participate in sector booms while insulating on the downside of overexposure.

Evaluate Risk

Last month finally marked the full rebound of the Nasdaq from the technology crash 15 years ago, serving as a reminder that losses can be more powerful than gains. To avoid market timing altering your goals and plans, take inventory of your investment needs and timelines. Successful investing is more than just strategy. It’s also knowing a true sense of your comfort range; some investors prefer the thrill of the high wire, while others would rather stick closer to solid ground. This is why it’s important to evaluate risk tolerance on a regular basis. Doing so will give you an updated gauge of expectations compared to current investments.

Avoid High Fees

Trying to beat the market can be a costly and often missed venture. Time and again market gains don’t make up for the investment cost. According to the end of year SPIVA® report for 2014, 86.44% of large-cap fund managers underperformed the benchmark over a 1-year period. The long-term results are equally unfavorable with both the 5 and 10-year periods ranging from 82.07% to 88.65%. One large contributing factor to active management consistently underperforming is the high-cost of fees, both of the management and the investments internal fee structure that can erode the performance.

Beacon Capital Management offers investors many solutions to these annual portfolio upkeep tasks through its Beacon Vantage 2.0 products. Designed with the long-term in mind, the portfolio holdings are well diversified to insulate from any sudden market downturns and are consistently monitored and adjusted as needed to stay in line with the investment strategy and risk exposure. No matter an investor’s risk profile, Vantage 2.0 is offered in aggressive, balanced and conservative models, giving investors options for growth in their portfolio while preserving it for the long-term. To learn more about Beacon’s portfolio options, visit today.

beacon news

Beacon Founder, Chris Cook, recently contributed an article in Financial Advisor IQ titled “Stop Loss Is a Cure for Emotional Investing.” Read how Chris explains that a stop-loss safety net can help clients of all types invest more confidently.



Beacon Capital Management, Inc. is an investment advisory firm registered with the Securities and Exchange Commission. Additional information about Beacon Capital Management is also available on the SEC’s website at under CRD number 120641. Beacon Capital Management only transacts business in states where it is properly registered, or excluded or exempted from registration requirements.

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