Market Week: July 28, 2015

July 27th, 2015

The Markets (as of market close July 24, 2015)

Despite favorable reports on unemployment claims, home sales, and the Greek debt crisis, the market took quite a hit pretty much across the board last week, apparently in response to mediocre corporate earnings reports from some big-name companies. Each major U.S. index listed here lost over 2%, with the Russell 2000 suffering the largest downturn, dropping 41 points and over 3% compared to last Friday’s close. Bond prices were higher on the week, pushing yields on the 10-year Treasuries down about 8 basis points.

The price of gold (COMEX) plunged to $1,097.50 as investors exited the market in anticipation of higher interest rates. Crude oil (WTI) continued its tailspin, reaching its lowest level since early spring at $48.14/barrel. The national average retail regular gasoline price was $2.802 per gallon on July 20, 2015, $0.032 less than last week’s price and $0.791 below a year ago.

Market/Index

2014 Close

Prior Week

As of 7/24

Weekly Change

YTD Change

DJIA

17823.07

18086.45

17568.53

-2.86%

-1.43%

Nasdaq

4736.05

5210.14

5088.63

-2.33%

7.44%

S&P 500

2058.90

2126.64

2079.65

-2.21%

1.01%

Russell 2000

1204.70

1267.09

1225.99

-3.24%

1.77%

Global Dow

2501.66

2563.06

2516.70

-1.81%

0.60%

Fed. Funds

0.25%

0.25%

0.25%

0%

0%

10-year Treasuries

2.17%

2.34%

2.26%

-8 bps

9 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.

Last Week’s Headlines

·
Existing home sales increased in June to their highest pace in over eight years, while the cumulative effect of rising demand and limited supply helped push the national median sales price to an all-time high, according to the National Association of Realtors®. Total existing home sales increased to 3.2% in June to a seasonally adjusted annual rate of 5.49 million–up from May’s revised rate of 5.32 million. For the 40th consecutive month, the median existing home price for all housing types increased in June ($236,400), which is 6.5% above June 2014 and surpasses the peak median sales price set in July 2006 ($230,400).

·
Sales of new single-family houses dipped a bit in June, coming in at a seasonally adjusted annual rate of 482,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 6.8% below the revised May rate of 517,000, but is 18.1% above the June 2014 estimate of 408,000. It’s important to remember that data can be volatile, as reflected in the fact that the revised figures for new home sales in May actually fell 1.1%, as opposed to the initially estimated 2.2% gain. The median sales price of new houses sold in June 2015 was $281,800; the average sales price was $328,700. The seasonally adjusted estimate of new houses for sale at the end of June was 215,000. This represents a supply of 5.4 months at the current sales rate.

·
In the week ended July 18, the advance figure for seasonally adjusted initial claims for unemployment insurance was 255,000, a decrease of 26,000 from the previous week’s unrevised level of 281,000 according to the Department of Labor’s Unemployment Insurance Weekly Claims report. This is the lowest level for initial claims since November 24, 1973, when it was 233,000. The advance number for seasonally adjusted continuing claims for unemployment insurance during the week ended July 11 was 2,207,000, a decrease of 9,000 from the previous week’s revised level.

·
Greece and its creditors are moving toward formal talks needed to complete a bailout deal after the country’s parliament passed an additional set of austerity measures required by creditors. After Greek used emergency funds from the European Central Bank to pay its most pressing debts, the country’s banks opened their doors for the first time in three weeks, albeit under still-strict transaction limits.

Eye on the Week Ahead

Next week’s Federal Open Market Committee meeting may reveal when interest rates are targeted to increase. Some analysts are predicting September, while others still aren’t so sure. Inflationary trends haven’t yet picked up steam, while the labor market has remained unremarkably steady at best–both indicators that need to show strength before interest rates are raised, according to Fed Chair Janet Yellen.

Data sources: 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. Market data: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (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. 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 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

Market Week: July 20, 2015

July 20th, 2015

The Markets (as of market close July 17, 2015)

Following a week of losses, the market rebounded in a big way for the week ended July 17. News of a tentative agreement between Greece and its creditors seemed to quell investor concerns of a Grexit. Moves by the Chinese government have stopped a stretch of sell-offs, temporarily stabilizing the economy. All in all, technology-heavy Nasdaq was the best performer, followed by the S&P 500.

Possibly in response to the presumption that Iran will flood the oil market as a result of relaxed economic sanctions emanating from the nuclear agreement, crude oil was back down near $50 a barrel at $50.89. Conversely, the national average retail regular gasoline price increased to $2.834 per gallon on July 13, 2015, $0.041 above the prior week’s price but $0.801 below a year ago. Gold closed the week at $1,132.30 per ounce–its lowest price in five years.

Market/Index

2014 Close

Prior Week

As of 7/17

Weekly Change

YTD Change

DJIA

17823.07

17760.41

18086.45

1.84%

1.48%

Nasdaq

4736.05

4997.70

5210.14

4.25%

10.01%

S&P 500

2058.90

2076.62

2126.64

2.41%

3.29%

Russell 2000

1204.70

1252.02

1267.09

1.20%

5.18%

Global Dow

2501.66

2512.40

2563.06

2.02%

2.45%

Fed. Funds

0.25%

0.25%

0.25%

0%

0%

10-year Treasuries

2.17%

2.39%

2.34%

-5 bps

17 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.

Last Week’s Headlines

·
The drama that is Greece once again dominated the news this past week. Eurozone leaders and Greek Prime Minister Alexis Tsipras hammered out a rescue deal “in principle” that could provide an additional 86 billion euros in new loans to the economically distressed country. The Greek Parliament approved austerity measures (which include significant tax increases and spending cuts) demanded by creditors as a condition of the deal. With Greece’s approval, many eurozone countries must seek approval from their respective legislative authorities before formal negotiations on the specifics of a new agreement can begin. In the meantime, the European Commission has proposed giving Greece 7 billion euros in emergency loans that would enable the country to make a 4.2 billion euro loan payment owed to the European Central Bank by Monday the 20th.

·
Federal Reserve Chair Janet Yellen maintained the position that the U.S. economy was improving to the point of raising short-term interest rates sometime this year. According to text from a prepared speech given prior to her semiannual testimony before Congress, Yellen stated, “If the economy evolves as we expect, economic conditions likely would make it appropriate at some point this year to raise the federal-funds rate target, thereby beginning to normalize the stance of monetary policy.” Generally, the Fed is looking for continued labor market improvement and inflation approaching 2.0% as indications that the time is right to raise interest rates.

·
The U.S. Treasury report for June revealed a surplus of $51.8 billion. The fiscal year-to-date (October through June) deficit stands at $313.4 billion. Compared to the first nine months of the government’s 2014 fiscal year, total receipts for 2015 are up 8.3% as is total spending, which is ahead 5.1%.

·
The U.S. Census Bureau reported that the seasonally adjusted estimates for U.S. retail and food services sales for June decreased 0.3% from the previous month, coming in at $442.0 billion. The June estimate, coupled with the downward revision of May’s retail sales from 1.2% to 1.0%, reveals that second quarter consumer spending is weaker than previously estimated.

·
An indication that inflation may not be trending upward, both import (-0.1%) and export (-0.2%) prices fell in June from a month earlier, according to the U.S. Bureau of Labor Statistics. The continuing strength of the dollar plus weak overseas demand helped keep inflation from heading toward the Federal Reserve’s target of 2% before considering an interest rate hike.

·
On the other hand, producers in June received slightly higher prices for their goods and services. The Bureau of Labor Statistics Producer Price Index measures the average change over time in the prices received by domestic sellers of goods and services. The price index for goods and services rose a seasonally adjusted 0.4% in June, following an increase of 0.5% in May.

·
The U.S. Census Bureau’s May report for business inventories and sales showed trade sales and shipments were up 0.4% compared to April, while manufacturers’ inventories also increased by a seasonally adjusted 0.3%. The ratio of inventories to sales stood at 1.36–unchanged from the previous month. Rising inventories may be an indication that businesses are optimistic about future sales.

·
Industrial production has been consistently weak this year, but June did show some improvement according to the Federal Reserve’s industrial production report. Production increased 0.3% in June, but that followed two prior months of contraction, resulting in the annual rate of production for the second quarter of 2015 coming in at -1.4%.

·
According to the Department of Labor, in the week ended July 11, the advance figure for seasonally adjusted initial claims for unemployment insurance was 281,000, a decrease of 15,000 from the previous week’s revised level. The advance number for seasonally adjusted continuing claims for unemployment insurance during the week ended July 4 was 2,215,000, a decrease of 112,000 from the previous week’s revised level.

·
The housing market continues to be a fairly consistent sector. The National Association of Home Builders Housing Market Index, which provides a gauge of housing demand, came in at 60 for July, unchanged from the prior month and the strongest reading since 2005. The demand for new housing also increased, as the U.S. Census Bureau reported that housing starts for June rose 9.8% over May.

·
Consumer prices are beginning to inch higher as the Consumer Price Index rose 0.3% in June from a month earlier, according to the Bureau of Labor Statistics. Over the last 12 months, the unadjusted price index for all items increased by 0.1%–the first annual increase since December.

·
Reflective of the potential impact made by Greece’s debt crisis and China’s economic slowdown, the University of Michigan Consumer Sentiment Index wasn’t able to hold on to its June gains, dropping from 96.1 to 93.3 in July. However, on a brighter note, more buyers referenced higher incomes, suggesting consumer fundamentals have continued to improve.

Eye on the Week Ahead

Housing reports are front and center next week as both existing home sales and new home sales reports come out. Negotiations between Greece and its creditors should continue. Will funds be floated to Greece in the short term, enabling the country to make its next loan payment?

Data sources: 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. Market data: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (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. 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 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

Opinion of Interest

July 19th, 2015

Latest from a big European bank research department:

I believe that’s the market’s assessment that the latest Greek bailout deal will allow European stocks to resume their recent trend and continue outpacing American stocks.

The SPDR Euro Stoxx 50 ETF (NYSE Arca: FEZ) is up 4.7% compared to the S&P’s 2.05% year to date.
FEZ is a great proxy for some of the largest companies that are part of the 19 Euro Stoxx Supersector Indexes. Current holdings hail from the healthcare, energy, industrial, financial, automotive, insurance, and consumer staples sectors.

Its top 10 consist of mostly European household names: Sanofi SA (ADR) (NYSE: SNY), Total SA (ADR) (NYSE: TOT), Bayer AG (ADR) (OTCMKTS: BAYRY), Banco Santander SA (ADR) (NYSE: SAN), Anheuser-Busch Inbev SA (ADR) (NYSE: BUD), Daimler AG (OTCMKTS: DDAIF), BASF SE (ADR) (OTCMKTS: BASFY), Siemens AG (ADR) (OTCMKTS: SIEGY), Allianz SE (ADR) (OTCMKTS: AZSEY), and BNP Paribas SA (ADR) (OTCMKTS: BNPQY).

Because don’t forget, as bad as this deal may be for both sides in the long term, for now it keeps Greece inside the Eurozone. Meanwhile, the European Central Bank is still very much in QE mode.
And that means Europe is not finished playing catch up to the U.S.

With the new agreement all but locked up, European markets are returning to their cyclical bull market.
It’s time to go long European stocks through FEZ.

-Merv Hecht

China, computer glitches and Greece, Oh My!

July 12th, 2015

The stock market has been on a roller coaster ride for the past couple of weeks, capped so far by a 2% decline in the MSCI All-Country World index (ACWI) on Wed., July 8. Pick your reason: the recent stock rout in China, Greece’s continuing debt troubles or computer outages on the New York Stock Exchange and even United Airlines. The immediate trigger doesn’t really matter. What we’re seeing currently looks to us like a standard stock market correction, similar to what we saw at the beginning of this year and in October of 2014.

Corrections (usually—and rather arbitrarily—defined as a decline of more than -10% from a high) occur frequently, typically a couple of times each year. Declines of 5% to 10% are even more common. In other words, what we’re seeing is both normal and common. Don’t be spooked by the news media, whose job appears to be to scare as many people as possible. Every prior correction has come to an end, on average in 6 to 8 weeks. As the ACWI peaked on May 21, and it’s down about -8% since then, we may already be close to the end of the current decline. But however long it takes for stocks to rebound, patience remains a virtue.

Significant market drops such as the current one often provide new investment opportunities, and we’re already looking at which assets might do best when stocks resume their upward climb. Stay tuned for further insights in coming weeks.

Dr. Ken Waltzer, MD, MPH, AIF®, CFA, CFP®

Managing Director, KCS Wealth Advisory

Laura Gilman, CFP®, PFP, MBA

Managing Director, KCS Wealth Advisory

Adam Bragman

Director of Investment Research, KCS Wealth Advisory

Don’t Dismiss Dividends

July 7th, 2015
Summary:
  • We have found that dividends are often underappreciated by both amateurs and professionals
  • Most people don’t realize how much dividends contribute to the stock market’s total return
  • Dividends may be particularly useful in today’s low interest rate environment
Who needs dividends?
There are two ways to make money investing in equities (stocks): selling shares for more than you paid (appreciation) and cash dividends (income). Many people believe that dividends are a minor component of equity returns, or that they are mainly for retirees and other conservative investors. They (incorrectly) reason that younger people (and others who can afford to be more aggressive) should prefer stocks without dividends because the underlying companies tend to grow faster, causing their stock prices to rise more quickly.
While faster-growing companies often pay little or no dividends, this is not always true. Moreover, dividends provide a stream of cash payments that, unlike bond interest, tends to rise over time. This provides protection against inflation that bonds simply can’t match.
Dividends and the magic of compounding
Stock dividends can markedly enhance your returns, especially if you reinvest them. If you still believe their contribution is minor, think again: historically, reinvested dividends have added approximately +3.2%1 per year to US equity returns, using the S&P 500 Index as a benchmark. This may not sound like much, but it really adds up over time.
Don’t take our word for it: look at the numbers. During the 50 years ended May 31, 2015, the price of the S&P 500 index rose by an average of +6.6% per year. If this had been your total return from stocks, $1,000 would have grown to $23,640 during this period. Adding dividends increased this to +9.8%.1 What difference does an extra 3.2% make over 50 years? Through the “magic” of compounding, your $1,000 would have grown to $105,340, 4 ½ times more money! (These numbers exclude inflation and income taxes.)
A graph is worth 1,000 words
The graph below shows the difference between the return from stock price appreciation alone and with the addition of reinvested dividends over the past 50 years. Need we say more?
The role of dividends in a low interest rate environment
Investors today are concerned about fixed income (bond) investments because interest rates are historically low and likely to increase. Bond prices are hurt by rising interest rates, so it’s reasonable to assume that bonds may not fare so well over the next several years. Does this mean you should dramatically reduce your fixed income exposure? No—fixed income is a staple of more conservative portfolios, as it tends to provide “downside protection” during stock market selloffs.
However, those with a somewhat greater appetite for risk may find dividend-paying equities attractive as a replacement for part of their fixed income allocation. In a normal interest rate environment, it’s nearly impossible to create a portfolio of equities that generates the same level of income as a bond portfolio. Today, however, it’s rather easy:
Currently, the iShares Core U.S. Aggregate Bond ETF (AGG), composed of Treasury, mortgaged-backed and other US bonds, has a yield of 2.2%.2 The iShares Core S&P 500 ETF (IVV), which holds the 500 US stocks that make up the index, also has a yield of 2.2%.3 And the iShares Core High Dividend ETF (HDV), which contains a subset of stocks in the S&P 500 that pay higher dividends, sports a yield of 3.9%.4
With the S&P 500 yielding the same as the Barclays US Aggregate bond index, a basket of higher-yielding stocks paying considerably more, and with interest rates likely to rise, one could argue that the equity basket potentially offers a better risk profile than the fixed income basket. Both equity prices and dividends tend to keep pace with inflation over the long term, whereas the vast majority of bond payments do not adjust with inflation.
Naturally, the above argument should be weighed against the overall risk-reducing effect of bonds on a portfolio, as this strategy involves replacing some of your bond security blanket with equities. And there are other ways to enhance the yield of your bond portfolio, such as by investing in bonds outside the Barclays US Aggregate index. We’re happy to discuss both approaches in more detail.
Dr. Ken Waltzer, MD, MPH, AIF®, CFA, CFP®

Managing Director, KCS Wealth Advisory


Laura Gilman, CFP®, PFP, MBA

Managing Director, KCS Wealth Advisory


Adam Bragman

Director of Investment Research, KCS Wealth Advisory

Market Week: July 6, 2015

July 6th, 2015

Stock markets closed the holiday week on a sour note for the second week in a row. While several domestic indicators have been favorable, such as housing and unemployment, the markets across the board continued to lose value on the heels of Greece closing its banks for a week and missing a debt payment, coupled with China cutting lending rates in an attempt to support its sagging economy, while Puerto Rico has indicated it can’t pay its bills. The S&P 500, the Dow, Nasdaq, the Russell 2000, and the Global Dow all lost more than 1% compared to their respective closes last week. Year-to-date, the Dow has reached negative territory, down 0.52%.

The national average retail regular gasoline price decreased to $2.801 per gallon on June 29, 2015, $0.011 under last week’s price and $0.903 below a year ago. Gold closed Friday’s trading period selling at $1,167.80, down $5.40 from a week ago ($1,173.20).

Market/Index

2014 Close

Prior Week

As of 7/3

Weekly Change

YTD Change

DJIA

17823.07

17946.68

17730.11

-1.21%

-0.52%

Nasdaq

4736.05

5080.51

5009.21

-1.40%

5.77%

S&P 500

2058.90

2101.49

2076.78

-1.18%

0.87%

Russell 2000

1204.70

1279.79

1248.26

-2.46%

3.62%

Global Dow

2501.66

2577.80

2523.08

-2.12%

0.86%

Fed. Funds

0.25%

0.25%

0.25%

0%

0%

10-year Treasuries=

2.17%

2.47%

2.38%

-9 bps

21 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.
Last Week’s Headlines

· Furthering a positive trend in the housing market, the number of pending home sales continued to rise in May reaching their highest level in over nine years, according to the National Association of Realtors®. The pending home sales index, which is based on the volume of signed residential contracts for existing homes, jumped 0.9% in May from April, and is at its highest level (112.6) since April 2006.

· The U.S. Census Bureau reports that construction spending in May rose 0.8% compared to April. Building of manufacturing facilities, up 6.2%, outpaced residential construction, which increased by a moderate 0.3%.

· Following last week’s favorable consumer sentiment report from the University of Michigan, the Conference Board’s consumer confidence index reached 101.4 in June, up from 94.6 in May. According to the report, consumers’ confidence in the economy is growing as an increasing percentage of those polled thought business conditions were good (26.4%) and starting jobs were plentiful (21.4%), while the percentage of consumers expecting business conditions to improve over the next six months rose from 16.0% to 18.5%.

· Hit with weak exports, the manufacturing sector continues to trend downward. New orders for manufactured goods in May, down nine of the last ten months, decreased $4.5 billion or 1.0% to $470.5 billion, the Census Bureau reported last week.

· June was not much better for the business sector. Data indicated a tempered improvement in overall business conditions across the U. S. manufacturing sector, with softer output growth offsetting a slight pickup in the pace of new business gains and job creation according to reports from the Institute for Supply Management and Markit’s U.S. Manufacturing Purchasing Managers’ Index™. Both indexes registered over 50.0, which indicates expansion. PMI came in at 53.6 in June, slightly down from 54.0 in May, while June’s ISM index registered 53.5 compared to 52.8 in May. However, each survey noted that export orders are still lagging.

· According to the Energy Information Administration report, gasoline production increased for the week ending June 26, averaging over 10.0 million barrels per day. Compared to the previous week, crude oil inventories were up 2.4 million barrels, partly attributable to increasing crude oil imports, which were up by 748,000 barrels per day. At 465.4 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years.

· According to the U.S. Bureau of Labor Statistics report for June, total nonfarm payroll employment increased by 223,000, the unemployment rate declined by 0.2% to 5.3%, and the number of unemployed persons declined by 375,000 to 8.3 million. Job gains occurred in professional and business services, health care, retail trade, financial activities, and in transportation and warehousing. On the other hand, seasonally adjusted new claims for unemployment insurance increased 10,000 to 281,000 for the week ending June 27, although the number of initial claims is significantly lower compared to this time last year (313,000).
Eye on the Week Ahead

The recent gains achieved in the stock market were virtually wiped out this past week, primarily due to the financial upheaval involving Greece. There is plenty of uncertainty relating to what will happen after Greece’s June 5th referendum. How will the markets, domestically and abroad, react to the vote? Of particular interest this week will be the FOMC meeting and whether the committee is able to provide any indication as to when they will raise interest rates.

Data sources: 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. Market data: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (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. 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 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.