NASDAQ Composite & S&P 500 Continue to Rise

Posted by: Ryan Kimes, CFP®

Market Update – October 21st, 2019

The Week on Wall Street

Earnings helped give the Nasdaq Composite and S&P 500 a slight lift last week, offsetting investor disappointment over the small scope of the preliminary U.S.-China trade deal reached on October 11. Blue chips took a small weekly loss.   

  

The Nasdaq and S&P respectively gained 0.40% and 0.54% on the week. The Dow Jones Industrial Average retreated just 0.17%. Outdoing these three benchmarks, the MSCI EAFE index tracking stocks in developed overseas markets rose 1.35%.[i],[ii] 


10.21.19.jpg

  

The Early Earnings Picture

According to stock market analytics firm FactSet, 15% of S&P 500 companies had reported results through Friday’s close. Of those companies, 84% announced that net profits topping projections, and 64% said that revenues had exceeded forecasts. 

  

One big question is whether overall earnings for S&P 500 firms will show year-over-year growth. There was no year-over-year earnings gain evident in either Q1 or Q2.[iii]  

       

Retail Sales Declined Last Month

Shoppers scaled back their purchases in September. The Census Bureau announced a 0.3% dip for retail sales, the first decrease in seven months.

  

Auto sales can influence this number, and car and truck buying fell 0.9% last month. A fall pickup in that category may help encourage another monthly advance.[iv]

  

What’s Next

If you buy your own health coverage, note that the open enrollment period for 2020 health insurance plans begins on November 1 in most states. The open enrollment window closes on December 15.[v]

  

THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: The National Association of Realtors publishes a report on September existing home sales.

Thursday: A report on September new home sales arrives from the Census Bureau.

Friday: The University of Michigan’s final October Consumer Sentiment Index appears, evaluating consumer confidence levels.

 

Source: Econoday, October 18, 2019

The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Monday: Celanese (CE), Halliburton (HAL), Sap (SAP), TD Ameritrade (AMTD)

Tuesday: McDonalds (MCD), Novartis (NVS), Procter & Gamble (PG), Texas Instruments (TXN)

Wednesday: Boeing (BA), Eli Lilly (LLY), Microsoft (MSFT), PayPal (PYPL)

Thursday: Amazon (AMZN), Comcast (CMCSA), Intel (INTC), Visa (V)

Friday: Anheuser-Busch (BUD), Verizon (VZ)

 

Source: Zacks, October 18, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.


[i]https://www.wsj.com/market-data

[ii]https://quotes.wsj.com/index/XX/990300/historical-prices

[iii]https://insight.factset.com/sp-500-earnings-season-update-october-18-2019

[iv]https://www.reuters.com/article/us-usa-economy-retail/weak-u-s-retail-sales-cast-gloom-over-economy-idUSKBN1WV1NG

[v]https://www.businessinsider.com/what-is-open-enrollment-your-opportunity-to-buy-health-insurance

Evolving Trade Policies Swing Markets

Posted by: Ryan Kimes, CFP®

Market Update – October 16th, 2019

The Week on Wall Street

Stock prices pushed higher last week, as investors remained hyper-focused on any new developments with the U.S. trade negotiations with China.

 

The Dow Jones Industrial Average picked up 0.91%, while the Standard & Poor’s 500 rose 0.62%. The Nasdaq Composite index gained 0.93% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, added 2.28%.[i],[ii],[iii]



 

Trade Winds

For nearly two years, investors’ moods have seemed to swing with each twist in the ongoing trade saga between the U.S. and China. Last week was no different.

 

On Tuesday, stock prices fell sharply on concerns that U.S.-China trade tensions had escalated. The White House announced the addition of 28 new Chinese companies to its list of firms that are banned from doing business in the U.S. Later in the day, White House officials confirmed that they had implemented travel bans on selected Chinese officials.[iv],[v]

 

But prices bounced back Thursday and surged higher Friday on White House reports that suggested the trade talks between the two countries were “going really well.” Near the close Friday, the White House confirmed that the U.S. has come to a “very substantial phase one deal” with China.[vi],[vii]


Quarterly Earnings

Investors may start to get a better glimpse into third-quarter earnings this week, as more than 150 companies are expected to report on their operations.[viii]

 

As “earnings season” get underway, some attention may shift from the U.S.-China trade negotiations and toward company reports. 

What’s Next

Some U.S. financial markets will be open, and some will be closed, on Monday, October 14, in observance of the federal holiday Columbus Day. The U.S. bonds markets and most banks will be closed. But the New York Stock Exchange and the NASDAQ will be open for regular hours.

THE WEEK AHEAD: KEY ECONOMIC DATA

Wednesday: September Retail Sales are reported before the markets open.

Thursday: Housing Starts for September are released. A “start” is defined as the beginning of excavation of the foundation for the building. Philadelphia Fed Business Outlook Survey. The survey can provide insights into the manufacturing sector.
 

Source: Econoday, October 11, 2019

The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: Netflix (NFLX), Johnson & Johnson (JNJ), The Goldman Sachs Group (GS)

Wednesday: Abbott Laboratories (ABT), United Rentals (URI), Winnebago Industries (WGO)

Thursday: Morgan Stanley (MS), PayPal Holdings (PYPL), Intuitive Surgical (ISRG)

Friday: Coca-Cola (KO), Schlumberger Limited (SLB), American Express (AXP)

Source: Zacks, October 11, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.


[i] https://www.wsj.com/market-data

[ii] https://www.wsj.com/market-data

[iii] https://quotes.wsj.com/index/XX/990300/historical-prices

[iv] https://www.yahoo.com/news/1-u-imposes-visa-restrictions-195007427.html

[v] https://finance.yahoo.com/news/u-bans-travel-chinese-officials-185734111.html

[vi] https://www.cnbc.com/2019/10/10/trump-says-china-trade-talks-are-going-very-well.html?&qsearchterm=really%20well%20trump

[vii] https://www.cnbc.com/2019/10/11/trump-says-us-has-come-to-a-substantial-phase-one-deal-with-china.html

[viii] https://www.zacks.com/earnings/earnings-calendar

Markets Gain Into the Fourth Quarter

Posted by: Ryan Kimes, CFP®

Market Update – October 7th, 2019

The Week on Wall Street

The fourth quarter started with a mixed week for equities. The Dow Jones Industrial Average lost 0.92% for the week; the S&P 500, 0.33%. In contrast, the Nasdaq Composite improved 0.54%. Overseas stocks pulled back: the MSCI EAFE index dipped 2.60%.[i],[ii]

 

The Institute for Supply Management’s Manufacturing Purchasing Manager Index fell to 47.8 in September, its lowest level in ten years. Traders worried that the number reflected weakening business confidence. ISM’s latest Non-Manufacturing PMI also declined, but the 52.6 reading indicated growth in the service sector last month.[iii],[iv] 

       

The Department of Labor said that employers added 136,000 net new workers in September. Unemployment was at 3.5%, a level last seen in December 1969. The U-6 jobless rate, which counts both the unemployed and underemployed, fell to a 19-year low of 6.9%. Monthly job creation has averaged 161,000 so far in 2019, down from 223,000 in 2018. This may reflect the challenge companies face trying to fill job openings in an economy with so little unemployment.[v]

 

The next earnings season is just ahead. Before it begins, let’s take a look back at the third quarter.


10.08.19.jpg

 


S&P 500 Ends Quarter Higher

In a statistical coincidence, the Dow Jones Industrial Average and S&P 500 gained the same percentage in the quarter: 1.19%. The Dow settled at 26,916.83 on September 30; the S&P, at 2,976.74. Both indices registered their third straight quarterly advance. The Nasdaq Composite went sideways for Q3, ending the quarter 0.09% lower at 7,999.34.[vi],[vii]

 

U.S.-China Trade Disagreement Continued

On August 1, the U.S. announced tariffs on an additional $300 billion of Chinese products – some would be effective September 1; others, effective by December 15. Four days later, China devalued its main currency, the yuan, to a level unseen in 11 years – a move that immediately sent U.S. stocks 3% lower. (Devaluing the yuan made Chinese goods cheaper for buyers paying for them in dollars, effectively offsetting the impact of U.S. tariffs.) As September concluded, however, word came that trade representatives from both nations would resume talks on October 10.[viii],[ix],[x]

 

The Fed Made a Move

The Federal Reserve lowered the country’s short-term interest rate by a quarter-point on September 18, to a range of 1.75% to 2.00%. Federal Reserve Chairman Jerome Powell, speaking to the media after the decision, called the outlook for the U.S. economy “favorable.” At the same time, he noted “a lot of uncertainty” surrounding the near-term economy and the Fed’s monetary policy views.[xi]

   

What’s Next

Trade representatives from the U.S. and China return to the negotiating table on Thursday; their meeting is scheduled to conclude on Friday. Any news stemming from their talks could quickly affect equity markets, both here and abroad.

 

THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: Federal Reserve Chairman Jerome Powell speaks at the annual meeting of the National Association for Business Economics in Denver.

Wednesday: The Federal Reserve publishes the minutes from its September meeting.

Thursday: The Bureau of Labor Statistics presents the August Consumer Price Index, showing monthly and yearly inflation data.

Friday: The University of Michigan offers its preliminary October Consumer Sentiment Index, a measure of consumer confidence levels.

 

Source: Econoday, October 4, 2019

The Econoday and Federal Reserve economic calendars list upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: Domino’s (DPZ)

Thursday: Delta Air Lines (DAL)

Friday: Citigroup (C), Fastenal (FAST)

 

Source: Zacks, October 4, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.


[i]https://www.wsj.com/market-data

[ii]https://quotes.wsj.com/index/XX/990300/historical-prices

[iii]https://finance.yahoo.com/news/ism-manufacturing-101500823.html

[iv]https://www.investing.com/news/economic-indicators/newsbreak-ism-services-index-tumbles-to-3year-low-1991459

[v]https://www.usatoday.com/story/money/2019/10/04/september-jobs-report-economy-added-135-000-145-000-were-forecast/3859017002/

[vi]https://www.barrons.com/articles/the-dow-rose-97-points-because-we-still-want-to-invest-money-in-china-51569879471

[vii]https://www.marketwatch.com/investing/index/comp/historical

[viii]https://www.piie.com/blogs/trade-investment-policy-watch/trump-trade-war-china-date-guide

[ix]https://www.bloomberg.com/news/articles/2019-08-04/asia-stocks-set-to-drop-with-trade-back-in-focus-markets-wrap

[x]https://www.cnbc.com/2019/09/30/us-stocks-investors-monitor-us-china-trade-impeachment-inquiry.html

[xi]https://www.reuters.com/article/us-usa-fed/fed-cuts-rates-on-7-3-vote-gives-mixed-signals-on-next-move-idUSKBN1W32H7

 

Stocks Pull Back, Fed Yields Fall

Posted by: Ryan Kimes, CFP®

Market Update – September 23rd, 2019

The Week on Wall Street

Investors reacted to two major news items last week, one far more of a surprise than the other. The Federal Reserve did indeed make a rate cut, matching Wall Street expectations. Drone strikes on two of the world’s largest oil fields brought a shock to the global oil market.   

 

At Friday’s closing bell, stocks wound up with weekly losses after news broke that Chinese trade officials were heading home from the U.S. sooner than planned. The S&P 500 retreated 0.51% week-over-week; the Dow Jones Industrial Average lost 1.05%, and the Nasdaq Composite dipped 0.72%. In developed foreign markets, shares tracked by the MSCI EAFE index fell 0.31%.[i],[ii],[iii]  


09.23.19.jpg

 

Another Quarter-Point Cut

Wednesday, the Federal Open Market Committee voted 7-3 to lower the benchmark interest rate by another 0.25%, to a range of 1.75% to 2.00%.

 

While traders looked for signs of future guidance on monetary policy, little emerged from the latest Fed policy statement and Fed chair Jerome Powell’s subsequent press conference. The updated dot-plot forecast showed that seven Fed officials anticipated at least one more cut before 2020, while ten did not.[iv]  

      

Oil Prices Jump

As last week began, crude oil futures spiked in response to an attack that interrupted roughly 5% of the world’s oil production. The value of West Texas Intermediate crude, the U.S. benchmark, spiked 14.7% in a day, or $8.05 to $62.90 at Monday’s close. 

 

This was oil’s biggest one-day leap since September 2008. Prices came down from there: Friday, WTI crude settled at $58.48.[v],[vi]

 

Final Thought

So, what day last week saw the biggest loss or gain for stocks? Not Monday, when the market absorbed news of the Saudi oil field strike. Not Wednesday, when the Fed rate cut occurred. Instead, it was Friday, when the S&P 500 lost only 0.49%. It just goes to show that stocks may ride through seemingly market-moving events with little daily change.[vii]

 

THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: The Conference Board’s September Consumer Confidence Survey.

Wednesday: August new home sales data from the Census Bureau.

Thursday: The federal government’s third estimate of second-quarter economic growth.

Friday: August personal spending numbers from the Bureau of Economic Analysis, and September’s final University of Michigan Consumer Sentiment Index, measuring consumer confidence levels.

 

Source: Econoday, September 20, 2019

The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: AutoZone (AZO), Cintas (CTAS), Nike (NKE)

Thursday: Accenture (ACN), Carnival (CCL), Micron Technology (MU) 

 

Source: Zacks, September 20, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.


[i] https://www.marketwatch.com/story/dow-skids-to-friday-lows-amid-reports-that-chinas-delegation-has-canceled-a-tariff-related-visit-2019-09-20

[ii] https://www.wsj.com/market-data

[iii] https://quotes.wsj.com/index/XX/990300/historical-prices

[iv] https://www.reuters.com/article/us-usa-fed/fed-cuts-rates-on-7-3-vote-gives-mixed-signals-on-next-move-idUSKBN1W32H7

[v] https://www.marketwatch.com/story/us-oils-10-surge-after-saudi-attack-puts-it-on-track-for-the-biggest-daily-gain-in-312-years-2019-09-15

[vi] https://money.cnn.com/data/commodities/index.html

[vii] https://money.cnn.com/data/markets/sandp/

DOW, NASDAQ, & S&P 500 Push Forward

Posted by: Ryan Kimes, CFP®

Market Update – September 10th, 2019

The Week on Wall Street

Stocks rose last week, with help from two developments: the announcement of further U.S.-China trade talks as well as August hiring and manufacturing numbers that seemed to bolster the argument for a rate cut by the Federal Reserve.  

 

The broad U.S. equity market, as represented by the S&P 500, added 1.79% during a 4-day trading week. The Dow Jones Industrial Average improved 1.49%; the Nasdaq Composite, 1.76%. Foreign shares tracked by the MSCI EAFE index gained 1.69%.[i],[ii],[iii]


09.10.19.jpg

 

Trade Talks Poised to Restart

Trade representatives from the U.S. and China are planning to head back to the negotiating table early next month. This news came Thursday from China’s ministry of commerce, which confirmed a verbal agreement among Secretary of the Treasury Steven Mnuchin, U.S. Trade Representative Robert Lighthizer, and Chinese Vice Premier Liu He.  

 

Formal trade discussions between the U.S. and China last happened in July. China has said that it wants punitive U.S. tariffs on its products removed in the event of a deal.[iv]

 

Weaker Hiring & Manufacturing Data

Payrolls expanded with just 130,000 net new jobs in August, according to the Department of Labor; 25,000 were temp jobs linked to the federal government’s 2020 Census. The main jobless rate stayed at 3.7%. The U-6 rate, which measures both unemployment and underemployment, rose 0.2% to 7.2%.

 

A key gauge of U.S. factory activity, the Institute for Supply Management’s manufacturing purchasing manager index, fell to 49.1 in August. A number below 50 indicates factory sector contraction. Some investors took these hiring and manufacturing reports as hints of a slowing economy, one which the Federal Reserve could potentially try to stimulate with an interest rate cut.[v],[vi] 

      

What’s Ahead

August inflation data arrives this week, and if looks especially mild, it may amount to another suggestion that the Fed should ease. The European Central Bank concludes a meeting on Thursday, and Fed officials will certainly pay attention to its latest policy statement.[vii]

 

THE WEEK AHEAD: KEY ECONOMIC DATA

Thursday: A new Consumer Price Index, tracking both monthly and yearly inflation.

Friday: The August retail sales report from the Census Bureau.

 

Source: Econoday / MarketWatch Calendar, September 6, 2019

The Econoday and MarketWatch economic calendars list upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Thursday: Broadcom (AVGO), Kroger (KR)

 

Source: Zacks, September 6, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.


[i]https://www.wsj.com/market-data

[ii]https://www.wsj.com/market-data

[iii]https://quotes.wsj.com/index/XX/990300/historical-prices

[iv]https://www.cbsnews.com/news/u-s-china-trade-talks-scheduled-for-october-beijing-says-2019-09-05/

[v]https://www.bloomberg.com/news/articles/2019-09-06/u-s-payrolls-rise-130-000-boosted-by-25-000-for-census-count

[vi]https://tradingeconomics.com/united-states/business-confidence

[vii]https://www.cnbc.com/2019/09/06/stocks-look-to-reclaim-their-all-time-highs-in-the-week-ahead.html

 

Stocks React to New Tariffs

Posted by: Ryan Kimes, CFP®

Market Update – August 26th, 2019

The Week on Wall Street

Traders assumed that the week’s biggest news event would be Federal Reserve Chairman Jerome Powell’s speech at the annual Jackson Hole banking conference. Instead, China seized the headlines by announcing new tariffs on U.S. goods.

 

Domestic stocks ended up lower for the week. The Nasdaq Composite fell 1.83%; the S&P 500, 1.44%; the Dow Jones Industrial Average, 0.99%. International stocks posted a weekly gain: the MSCI EAFE benchmark rose 0.96%.[i],[ii]

 


08.26.19.jpg

Beijing Plans New Tariffs

Friday morning, China’s finance ministry stated it would levy import taxes of 5-10% on an additional $75 billion of American imports. One set of tariffs is slated to start September 1, targeting U.S. crops, meats, and seafood. A second set, effective December 15, will put tariffs on U.S.-made cars and car parts. In total, these taxes are scheduled for more than 5,000 American products. 

 

Friday evening, the White House announced two rounds of 5% increases on existing U.S. tariffs on Chinese goods, to be successively implemented on September 1 and October 1.[iii],[iv] 

 

Powell Reflects at Jackson Hole

Friday, Jerome Powell delivered an address on monetary policy at the Kansas City Fed’s annual Jackson Hole symposium. He noted that the global economy currently presented a “complex, turbulent picture,” and added that the Fed was “carefully watching developments” and would “act as appropriate.” 

    

Investors wonder if the central bank will consider another rate cut at its September meeting. Comments from other Fed officials at Jackson Hole did not indicate a consensus on that matter.[v]  

      

Leading Indicators Rise

The Conference Board, the business research group known for its monthly Consumer Confidence Index, also publishes a monthly Leading Economic Indicator (LEI) Index. The Conference Board LEI provides a forward-looking analysis of the health of the business cycle, looking at ten factors ranging from consumer expectations to stock prices to construction activity.

 

In July, the LEI rose 0.5%, following 0.1% descents in May and June. This sudden increase offers optimism at a time when investors are wondering about the momentum of the economy.[vi]

 

Final Thought

Bond prices have risen around the world, leading to lower bond yields. In some instances, yields have turned negative. While the yield on the 10-year Treasury has also declined, it is still above 1.5%, notably exceeding the yields of similar-duration bonds in France, Germany, Spain, and the United Kingdom.[vii]

 

THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: The Conference Board’s July Consumer Confidence Index.

Thursday: The Bureau of Economic Analysis presents the second estimate of second-quarter economic growth, and the National Association of Realtors publishes new data on pending home sales.

Friday: July consumer spending data from the Department of Commerce, and July’s final University of Michigan Consumer Sentiment Index (a gauge of consumer confidence levels).

 

Source: Econoday / MarketWatch Calendar, August 23, 2019

The Econoday and MarketWatch economic calendars list upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: Autodesk (ADSK)

Thursday: Abercrombie & Fitch (ABF), Best Buy (BBS), Lululemon Athletica (LULU)

 

Source: Zacks, August 23, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.


[i] https://www.wsj.com/market-data

[ii] https://quotes.wsj.com/index/XX/990300/historical-prices

[iii] https://www.cnn.com/2019/08/23/business/china-tariff-products-soybeans-oil/index.html

[iv] https://www.marketwatch.com/story/trump-says-us-tariffs-will-increase-on-chinese-goods-2019-08-23

[v] https://www.marketwatch.com/story/powell-says-fed-carefully-watching-developments-and-will-act-as-appropriate-2019-08-23-10103027

[vi] https://www.conference-board.org/data/bcicountry.cfm?cid=1

[vii] https://www.cnbc.com/2019/08/20/investing-in-the-strange-negative-yield-world-its-very-hard-to-wrap-your-arms-around.html

 

Equity Volatility Continues

Posted by: Ryan Kimes, CFP®

Market Update – August 19th, 2019

The Week on Wall Street

U.S. stock indices saw significant ups and downs last week, with traders looking for economic cues from Treasury yields and also developments in the tariff fight between the U.S. and China.  

 

The S&P 500 lost 1.03% on the week; the Dow Jones Industrial Average and Nasdaq Composite respectively declined 1.53% and 0.79%. Overseas shares also retreated: the MSCI EAFE index lost 2.34%.[i],[ii]


08.19.19.jpg

 

Attention on the Bond Market

Wednesday, the yield of the 2-year Treasury bond briefly exceeded that of the 10-year Treasury bond. When this circumstance occurs, it signals that institutional investors are less confident about the near-term economy. That view is not uniform. Asked whether the U.S. was on the verge of an economic slowdown, former Federal Reserve Chair Janet Yellen told Fox Business “the answer is most likely no,” noting that the economy “has enough strength” to avoid one. 

 

The demand for bonds has definitely pushed prices for 10-year and 30-year Treasuries higher, and their yields are now lower (bond yields usually fall as bond prices rise). The 30-year Treasury yield hit a historic low last week.[iii],[iv]  

      

Some China Tariffs Postponed

Last week, the Office of the U.S. Trade Representative announced that about half the Chinese imports slated to be taxed with 10% tariffs starting September 1 would be exempt from such taxes until December 15.

 

The White House said that the reprieve was made with the upcoming holiday shopping season in mind, so that tariffs might have less impact on both retailers and consumers.[v]

 

Final Thought

Lower interest rates on bonds are now influencing mortgages. According to mortgage reseller Freddie Mac, the average interest rate on a conventional 30-year home loan was just 3.6% last week. That compares to 3.81% roughly a month ago (July 18).[vi]

 

30-year and 15-year fixed rate mortgages are conventional home loans generally featuring a limit of $484,350 ($726,525 in high-cost areas) that meet the lending requirements of Fannie Mae and Freddie Mac, but they are not mortgages guaranteed or insured by any government agency. Private mortgage insurance, or PMI, is required for any conventional loan with less than a 20% down payment.

THE WEEK AHEAD: KEY ECONOMIC DATA

Wednesday: The minutes of the July Federal Reserve meeting and the latest existing home sales data from the National Association of Realtors.

Friday: Federal Reserve Chairman Jerome Powell delivers a speech at the Fed’s annual Jackson Hole economic conference on monetary policy, and July new home sales numbers arrive from the Census Bureau.

 

Source: Econoday / MarketWatch Calendar, August 16, 2019

The Econoday and MarketWatch economic calendars list upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Monday: Baidu (BIDU), Estee Lauder (EL)

Tuesday: Home Depot (HD), Medtronic (MDT), TJX Companies (TJX)

Wednesday: Analog Devices (ADI), Lowe’s (LOW), Target (TGT)

Thursday: Salesforce (CRM), Intuit (INTU)

 

Source: Zacks, August 16, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

 


[i] https://www.wsj.com/market-data

[ii] https://quotes.wsj.com/index/XX/990300/historical-prices

[iii] https://www.cnbc.com/2019/08/15/us-bonds-30-year-treasury-yield-falls-below-2percent-for-first-time-ever.html

[iv] https://www.foxbusiness.com/economy/janet-yellen-to-wall-street-a-recession-is-unlikely

[v] https://www.reuters.com/article/us-usa-trade-china-tariffs/trump-delays-tariffs-on-chinese-cellphones-laptops-toys-markets-jump-idUSKCN1V31CX

[vi] http://www.freddiemac.com/pmms/archive.html

 

Stocks Decline with Interest Rate Announcements

Posted by: Ryan Kimes, CFP®

Market Update – August 6th, 2019

The Week on Wall Street

Last week, the Federal Reserve cut interest rates for the first time in more than a decade, in line with Wall Street’s expectations. Ironically, stocks had their worst week of 2019. 

 

The S&P 500 finished the week 3.10% lower. The Dow Jones Industrial Average and the Nasdaq Composite also posted weekly losses; the blue chips fell 2.60%, while the premier tech benchmark slumped 3.92%. International stocks tracked by MSCI’s EAFE index dipped 1.06%.[1],[2],[3]


08.06.19.jpg

 


Fed Cuts Benchmark Interest Rate

On Wednesday, the central bank reduced the federal funds rate by 0.25%. The latest Fed policy statement noted that “global developments” and “muted inflation” influenced the decision. 

 

Addressing the media, Fed Chairman Jerome Powell described the cut as a “mid-cycle adjustment.” After that comment, Wednesday’s trading session turned volatile on the interpretation that the cut was a “one and done” move, instead of what might be the first in a series.[iv]  

      

More Tariffs Planned

Shares also fell Thursday, after a White House tweet indicated that the U.S. would put a 10% tariff on another $300 billion of goods coming from China, effective September 1.  

 

Practically speaking, this would mean a tariff on nearly all Chinese products arriving in America. So far, the announcement has not affected plans for trade delegates from both nations to continue negotiations in September.[v]

 

The Latest Hiring Data

Payrolls expanded with 164,000 net new jobs in July, according to the Department of Labor. The headline jobless rate stayed at 3.7%; it has now been under 4% for 17 months. The U-6 jobless rate, which counts both underemployed and unemployed Americans, dipped to 7.0%, a level unseen since December 2000.

 

Monthly job growth has averaged 140,000 over the past three months, compared to 187,000 in 2018.[vi]

 

THE WEEK AHEAD: KEY ECONOMIC DATA

Monday: The Institute for Supply Management releases its latest Non-Manufacturing Purchasing Managers Index, its monthly gauge of business activity in America’s service sector.

 

Source: Econoday / MarketWatch Calendar, August 2, 2019

The Econoday and MarketWatch economic calendars list upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Monday: Marriott International (MAR), Tyson Foods (TSN)

Tuesday: Walt Disney Co. (DIS)

Wednesday: American International Group (AIG), CVS Health (CVS)

Thursday: Booking Holdings (BKNG), Uber (UBER)

 

Source: Zacks, August 2, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.


[1]https://www.apnews.com/e15c18b9dbc44efab400d2214e2cb6f9

[2]https://www.wsj.com/market-data

[3]https://quotes.wsj.com/index/XX/990300/historical-prices

[iv]https://www.forbes.com/sites/jjkinahan/2019/07/31/feds-quarter-point-rate-cut-weak-global-growth-trade-tensions-muted-inflation-cited

[v]https://www.cnn.com/2019/08/01/investing/asian-market-latest-trade-war/index.html

[vi]https://www.cnn.com/2019/08/02/economy/july-jobs-report/index.html