Dan Miller - Advice & Portfolio Specialist Dan Wanstreet, CFA - Senior Advice & Portfolio Specialist

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1 Dan Miller - Advice & Portfolio Specialist Dan Wanstreet, CFA - Senior Advice & Portfolio Specialist January 2018 Recap U.S. equities started the year off on a positive note, as recently passed tax reform legislation and strong corporate earnings releases boosted stocks. Treasuries saw a steep sell-off throughout the month as central banks around the globe called for rising inflation amid strong economic updates. The Federal Reserve opted to leave interest rates unchanged at its January policy meeting but offered what some investors perceived to be hawkish language in its outlook for Overseas markets climbed with their U.S. counterparts, while oil prices rose amid falling U.S. inventories. For the month of January, the Dow Jones Industrial Average climbed 5.8%, its 10th consecutive monthly advance and the best January performance since The blue-chip benchmark reached thousand-point milestones twice in January, and its march from 25,000 to 26,000 took just seven sessions. The Nasdaq Composite added 7.6% and topped 7,000 for the first time. The S&P 500 was up 5.6% in January, its best start to a year since Earnings remained a main investor focus, with fourth-quarter reporting season yielding strong results. Roughly 40% of the S&P 500 had reported earnings through Jan. 31, with roughly 80% of companies that reported topping analyst earnings and revenue projections, the best mark since Overall, S&P 500 profits are projected to rise 13.3% from the same period last year, while revenue is slated to grow 7.5%, according to FactSet. Consumer Discretionary shares were the best-performing S&P 500 sector, rising 9.2%. Technology also outperformed amid mostly positive earnings results, including a 20% climb for Netflix (NFLX, $267.35) shares following its quarterly release. The income centric Utilities, Real Estate, and Telecom sectors all underperformed amid the rise in bond yields. Industrials were mixed, with Boeing (BA, $348.91) building on its robust 2017 advance to become the best performing Dow stock in January, but airline shares tumbled amid fears of a price war. General Electric (GE, $15.64) was a notable decliner, losing 7.3% after announcing it would set aside an additional $15 billion to help its fledgling GE Capital insurance business. Financials in the S&P 500 gained 6.3%, as most of the big banks topped earnings and revenue estimates despite a drop in trading revenue. Energy shares climbed amid a 7.1% jump in West Texas Intermediate crude prices. The gains came amid increased OPEC compliance to production cuts and a record 10-straight weeks of falling U.S. oil inventories. Another catalyst in the equity markets was merger activity. According to Bloomberg, M&A activity in January was the highest since Positive economic data was another key catalyst for the markets in January. The ISM manufacturing index increased to its highest level in two years and capped its strongest yearly figure since While the December jobs report from the Department of Labor missed expectations, weekly jobless claims hit their lowest levels since A measure on inflation showed core consumer prices increased 0.3% in December, the largest increase in 11 months. The strong economic releases led to a shift in the Fed s outlook on inflation. At the conclusion of the January Federal Open Market Committee Meeting, policy-makers left rates unchanged but cautioned that rising inflation numbers could accelerate the schedule for future rate hikes. January s meeting also marked Janet Yellen s final appearance as Chair of the central bank with Jerome Powell scheduled to succeed her at the helm of the Fed. Investment and Insurance Products: NOT FDIC Insured NO Bank Guarantee MAY Lose Value

2 Following the data and the perceived hawkish central bank release, Treasuries suffered a steep sell-off in the month of January as yields climbed along the curve. The yield on the benchmark 10-year note settled at 2.72%, its highest point since On the long end of the curve, the yield on the 30-year bond climbed to 2.95%, its highest since March. Following the Fed s announcement, the two-year note yield climbed to 2.15%, the highest mark since the financial crisis. The U.S. dollar moved in the opposite direction to yields. The Dollar Index fell 3.5% in January, its worst monthly decline in more than two years. The decline reached its height when Treasury Secretary Steven Mnuchin hinted that the current administration favors a weaker dollar to help balance the U.S. trade deficit. While President Trump walked back those remarks, saying he favors a stronger dollar, the greenback continued to fall after the administration announced steep tariffs on solar panels and washing machines. Overseas, markets had a strong start to 2018 as investors remained optimistic on the global growth story and key central banks around the world maintained their accommodative monetary policy. In Europe, the STOXX 600 added 1.6% for the month as unemployment, manufacturing production, and consumer confidence in the region all reached at least 10-year highs. In Japan, the Nikkei 225 climbed 1.5% in January to its highest level in two decades as the Bank of Japan hinted its stimulus measures would remain in place at least through the end of the year. In China, the Shanghai Composite was up 5.3% after positive updates on GDP growth and manufacturing. The Hang Seng in Hong Kong rose 9.9% in the first month of the year after it was the best performing developed index in The MSCI Emerging Markets Index also surged in January as a weaker dollar and rising commodity prices sent the benchmark to its highest level in seven years. Disclaimers Pricing as of market close on Feb 2, 2018 unless indicated otherwise. All investing involves some degree of risk, whether it is associated with market volatility, purchasing power or a specific security. Additional information available upon request. Past performance is not a guide to future performance. The material contained herein has been prepared from sources and data we believe to be reliable but we make no guarantee as to its accuracy or completeness. This material is published solely for informational purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or investment product. Opinions and estimates are as of a certain date and subject to change without notice.

3 Index Definitions: The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally the leaders in their industry. The S&P 500 Index is a capitalization-weighted index of 500 stocks, representing all major industries. The US Dollar Index measures the performance of the US Dollar against a basket of foreign currencies. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. The MSCI Emerging Markets Index consists of the following 23 emerging market country indexes: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates. The Nikkei-225 Stock Average is a price-weighted average of 225 top-rated Japanese companies listed in the First Section of the Tokyo Stock Exchange. The Shanghai Stock Exchange Composite Index is a capitalization-weighted index. The index tracks the daily price performance of all A-shares and B-shares listed on the Shanghai Stock Exchange. The STOXX Europe 600 Index is derived from the STOXX Europe Total Market Index (TMI) and is a subset of the STOXX Global 1800 Index. With a fixed number of 600 components, the STOXX Europe 600 Index represents large, mid and small capitalization companies across 18

4 U.S. Markets S&P Dow Jones Industrial Average Nasdaq Composite S&P 400 Mid Cap S&P 600 Small Cap U.S. Sector Performance Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Information Technology Materials Telecom Utilities International Markets U.K. FTSE Germany DAX France CAC Spain IBEX Italy FTSE MIB Greece ATHEX MSCI Emerging Market Shanghai Composite Japan Nikkei Hong Kong Hang Seng Brazil Bovespa Russia Micex India Sensex Treasuries Maturity Close January December Historical Yields 4th Quarter Year Year Year Year

5 Municipal Bonds Maturity Close January December 4th Quarter 2017 S&P Municipal Bond Index S&P Muni Bond Long Intermediate S&P Muni Bond Intermediate S&P Muni Bond Short S&P Muni Bond Investment Grade S&P Muni Bond High Yield S&P Muni Bond General Obligation Commodities Front Month Futures Close January December 4th Quarter 2017 CRB Index Oil/bbl Natural Gas Gold Silver Copper Nickel Foreign Exchange Currency Close January December 4th Quarter 2017 Dollar Index Euro/USD USD/Yen GBPound/USD USD/CAD USD/Krona USD/Swiss Franc Source: Bloomberg *All prices as of the close Jan. 31, 2018 The opinions expressed here reflect the judgment of the author as of the date of the report and are subject to change without notice. Any market prices are only indications of market values and are subject to change. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Additional information is available upon request. Please contact your Financial Advisor. Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC, separate registered broker-dealers and non-bank affiliates of Wells Fargo & Company Wells Fargo Clearing Services, LLC. All rights reserved. CAR