Markets “In a Nutshell” for April 2, 2019
Investment Week at a Glance
Stocks finished mostly up for the week. The Dow Jones Industrial Average was up 1.67%, the S&P 500 rose 1.20 %, the New York Stock Exchange Composite (2,000 stocks) rose 1.26% and the average investors index (Value Line Index) was up 1.71%. Foreign stocks (DJ Global ex U.S.) were down -0.39%. Bond prices were higher for the week, pushing the yield on the 10-year U.S. Treasury down 4 basis points to finish the week at 2.42%. (Data sources: Wall Street Journal)
U.S Stocks Off to Strong Start
Stocks finished the 1st quarter of 2019 on Saturday, posting a gain of 13% for the first three months of the year for the best quarter since 2009 and the best 1st quarter of a year since 1998. Much of the positive sentiment can be tied to the cautious tone struck by the Federal Reserve at their last policy meeting, but also to the realization that the economy isn’t slowing as fast as markets thought in December. GDP in the 4th Quarter of 2018 grew at a 2.2% annual rate and the Atlanta Fed GDPNow has an estimate for the 1st Quarter of 2019 of an annual rate of 2.1%. It seems the market was correct in predicting the economy would slow from the 3% pace of 2018, but overlooked how truly resilient this economy continues to be. (Wall Street Journal)
Buyer’s Market for Homes
The traditionally strong season for home buying is shaping up to be one of the best years since the housing crisis for buyers looking for a new home. Mortgage rates have begun to fall as the Federal Reserve has signaled it may have ended its rate hiking process, causing banks to begin to worry about future borrowing rates and raising competition. Rates have been rising for the past 3 years and got to the point last spring where mortgage rates were slowing demand for new home purchases. Along with lower rates, new housing supply is rising in many of the crowded real estate markets, lowering the amount of competition buyers have to worry about. (Wall Street Journal)
Lyft Begins Potential Banner IPO Year for Tech Stocks
Lyft, the ride hailing service that is one of the founding companies of an industry that didn’t exist in last decade, began trading in public markets on Friday and may be the first big IPO in a banner year for enormously valued tech companies. Lyft was valued just above $26 billion after its first full day of trading, but will likely go through a volatile first couple of weeks before it settles at a valuation. Uber, Lyft’s main competitor, is set to go public as well in the next couple months and, if current private valuations hold, could be worth over $100 billion on its first day of trading. There is a whole list of tech companies that are looking to take advantage of a resurgent market this year and 2019 looks like it can rival the high flying year of 1999, in terms of amount raised. (Wall Street Journal)
In the 1st quarter of 2019, the S&P 500 has had a positive return in each of the 3 months. How many times has that happened in the past 30 years?
Answer is below…
Have a good week!
a. The S&P 500 Index has started a year with 3 consecutive positive months on 8 occasions in the past 30 years. (Seeking Alpha)