Markets "In a Nutshell" for November 20, 2018Nov 20, 2018
Investment Week at a Glance
Stocks finished lower for the week. The Dow Jones Industrial Average was down 2.22%, the S&P 500 fell 1.61%, the New York Stock Exchange Composite (2,000 stocks) was down 1.09% and the average investors index (Value Line Index) was down 1.30%. Foreign stocks (DJ Global ex U.S.) were down 0.78%. Bond prices were higher for the week, pushing the yield on the 10-year U.S. Treasury down 12 basis points to finish the week at 3.06%. (Data sources: Barron’s Financial, Wall Street Journal)
The risk off sentiment seemed to return again last week as equity markets fell. Apple, which makes up approximately 5% of the Dow Jones Industrial Average and 12% of the NASDAQ, suffered its worst weekly decline in 7 months, falling 5% (Apple is now down 16% off its recent high). Disappointing iPhone sales and concerns over slower growth led shares lower for its 7th straight week, which is its longest losing streak since 2012.
Trade Tensions & Political/Geopolitical Concerns
Throughout the week, trade concerns seemed to be the primary culprit of negative investor sentiment. The sell off on Monday was heightened by news that the White House began drafting plans for new tariffs on automobile imports, which could have significant repercussions for domestic automobile manufacturers. Later in the week trade fears seemed to subside slightly as details emerged of efforts to revive trade talks with China ahead of the G-20. President Trump told said Chinese officials sent over a list of 142 steps they are willing to take to strike a trade deal, which according to President Trump was “pretty complete.”
Stocks gave back Tuesday’s early gains after crude oil prices suffered substantial losses after President Trump criticized Saudi Arabia’s oil production cutbacks. Later in the week the financial sector suffered losses after Representative Maxine Waters, who is likely to lead the House Financial Services Committee, pledged to end weakening regulations.
Although the 1950’s and 1960’s were a strong period for the U.S. economy, it didn’t make them immune from market bubbles. What popular pastime was involved in a bubble?
a) Hula Hooping
Have a good week!
Answer to quiz:
d) Bowling – A bowling bubble was created as the sport gained popularity. Brunswick Corp, who manufactures bowling equipment, rose 1,600% between the years 1957 and 1961. Throughout that period it was estimated that the average American spent at least 2 hours bowling each week.