Markets "In a Nutshell" for November 6, 2018Nov 06, 2018
Investment Week at a Glance
Stocks enjoyed an up week as the Dow Jones Industrial average gained 2.3% while the S&P 500 was up 2.4%. The New York Stock Exchange Composite (2,000 stocks) rose 2.9%. The “average investor’s index” (Value Line index) jumped 4.2% and foreign stocks (DJ Global ex U.S.) gained 3.4%. Bond yields rose (bond prices down) as the 10 year Treasury ended at 3.21%. (Data sources: Barron’s Financial, Wall Street Journal)
Jobs market hot in the U.S. as wages rise
The U.S. Labor Dept reported a big gain of 250,000 new jobs in October. While the jobs gain is not new (October’s jobs gains mark the 97th straight month of gains) the 3.1% rise in reported wages is new. For much of this 10 year economic up cycle, wage growth has been tepid, with workers earnings growing slowly. The 3.1% increase in wages (from 12 months ago) is the biggest increase in 9 years. Wage growth is good for the economy as more money in our wallets and purses mean more spending and higher economic growth.
Is the stock market correction done?
October was marked with higher stock market volatility as U.S. stocks dropped 10% from their highs. Ben Levisohn from Barron’s (11/5/18) writes that the stock drop on Friday in the face of such great jobs news could mean more volatility ahead before the market settles. Also investors may be concerned about a downside of great jobs news: higher interest rates. With the wage rise, the Federal Reserve is likely to keep to its path of raising interest rates to try to head off rising inflation. Higher rates are a challenge for stocks as higher rates of return on low risk investments such as cd’s, money markets mean more competition for investors dollars. Higher rates can also eat into corporate profits.
How to avoid making financial mistakes
Dr. Shlomo Benzarti, professor at UCLA’s School of Management, writes (in Wall Street Journal article 10/22/18) that smartphones and other digital devices have allowed for an explosion of instant financial information access. However, Dr. Benzarti’s research shows information overload can lead to poor financial decisions. Benzarti has a few suggestions to help people focus on their financial matters: Avoid multitasking, Pick the right time of day to work on finances, See the big picture, and Keep away from the phone (gulp! A tough one for many of us).
According to a Deloitte Global Mobile Consumer Survey, how many times per day do individuals check their mobile phones? a. 27 b. 47 c. 66 d. 81 ...Answer is below…
Have a good week
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