Markets “In a Nutshell” for April 15, 2019

Investment Week at a Glance

Stocks finished mostly up for the week. The Dow Jones Industrial Average was down 0.05%, the S&P 500 rose 0.51 %, the New York Stock Exchange Composite (2,000 stocks) rose 0.32% and the average investors index (Value Line Index) was up 0.45%. Foreign stocks (DJ Global ex U.S.) were up 0.26%. Bond prices were lower for the week, pushing the yield on the 10-year U.S. Treasury up 6 basis points to finish the week at 2.56%. (Data sources: Wall Street Journal)

1st Quarter Earnings Season Begins

1st quarter earnings reports began coming in late last week and will certainly drive the markets for the next month as investors look to see how companies performed in the wake of a much more pessimistic outlook to the economy than in years past. Current estimates are for earnings growth to come down substantially from last year’s tax cut fueled growth that sent the stock market soaring. The bar may be set low with current estimates appearing to be overly pessimistic, but it remains critical to the massive run up we’ve seen so far this year that the economic environment shows that it can continue to grow despite 4 interest rate increases and the end of the immediate effects of the tax cut in 2017. (Wall Street Journal)

Investors Playing the Waiting Game

As stocks have come close to returning back to all-time highs reached in late September 2018, investors seem to be waiting for the time being before making any bets on stocks in either direction. Stocks barely moved last week in terms of price and a total of 3 days last week had trading volumes lower than Christmas Eve, a historically quiet day for trading. As earnings season approaches and China trade news comes in, investors are content to wait and see how the market plays out before making any decisions. With all of the volatility the market experienced in the last 6 months, markets are essentially in the same place they were, but is always vulnerable to sudden moves. (Barron’s)

Global Trade Disputes Expand

As a China trade agreement is expected in the coming weeks and a reform of NAFTA being voted on soon, the U.S. has expanded its trade negotiation strategy to the whole world with talks expected in the coming months with Europe and Japan. This strategy has its supporters and critics, with a tradeoff of enduring near term economic and political pain in hopes of bilateral agreements for more fair trade. Time will tell if this strategy is effective, but the International Monetary Fund has already cited these trade disputes as a prime reason for slowing global growth, along with higher interest rates, political uncertainty and declining consumer and business confidence. The forecast is for 3.3% global growth in 2019, down from 3.7% in 2018, with the declines being led by a slower U.S., Europe and China. (Barron’s)

Quiz:

Ride hailing firm Uber filed for an IPO last week and is expected to be one of the biggest IPOs since the tech bubble of the early 2000’s. What value are they seeking to trade at?

a. $50 billion

b. $70 billion

c. $90 billion

d. $110 billion

Answer is below…

 

Have a good week!

 

Answer to quiz:

c. Uber is seeking a valuation of $90 billion (Barron’s)