Markets "In a Nutshell" for September 5, 2018Sep 05, 2018
Investment Week at a Glance
Stocks finished mostly higher for the week. The Dow Jones Industrial Average was up 0.68%, the S&P 500 rose 0.93%, the New York Stock Exchange Composite (2,000 stocks) was up 0.13% and the average investors index (Value Line Index) was up 0.32%. Foreign stocks (DJ Global ex U.S.) were down 0.43%. Bond prices were lower for the week, pushing the yield on the 10-year U.S. Treasury up 5 basis point to finish the week at 2.86%. (Data sources: Barron’s Financial, Wall Street Journal)
Stocks marched higher early last week as progress appears to have been made in U.S. and Mexico trade talks, which could eventually replace the North American Free Trade Agreement (NAFTA). In addition, it has been reported that the Trump Administration is considering taking additional steps to implement new tariffs on $200 billion of Chinese products. If this were to take place, more than likely it will be met with a reciprocal response from the Chinese government and would further escalate the trade tensions between the United States and China. Despite trade uncertainties, the underlying foundation of rising corporate profits and economic expansion are still intact.
Range-Bound Treasury Yields
Neither numerous positive economic data releases nor brand new record highs for the S&P 500 were enough to move Treasure yields out of their range-bound path last week. The 10-year Treasury yield finish at 2.86% last Friday. This marks 16 consecutive days the 10-year has closed between 2.82% and 2.89%. Gains in inflation also had little effect as the PCE Index, the Federal Reserves preferred inflation barometer, rose to 2.3% year over year.
Domestic equities sailed to record setting levels last week and the S&P 500 exceeded 2,900 while the Nasdaq Composite eclipsed 8,000 for the first time on record. These gains were supported by strong economic fundamentals and corporate earnings. There have now been two successive quarters of earnings growth greater than 20% compared to last year’s numbers.
Through the first 8 months of 2018, which sector is leading the way?
Have a good week!
Answer to quiz:
a) Healthcare. The healthcare sector is up 19.16% YTD. A close second is the Technology sector, up 19.05%