Markets “In a Nutshell” for April 8, 2019

Investment Week at a Glance

Stocks finished up for the week. The Dow Jones Industrial Average was up 3.14%, the S&P 500 rose 2.06 %, the New York Stock Exchange Composite (2,000 stocks) rose 1.82% and the average investors index (Value Line Index) was up 2.86%. Foreign stocks (DJ Global ex U.S.) were up 2.02%. Bond prices were lower for the week, pushing the yield on the 10-year U.S. Treasury up 8 basis points to finish the week at 2.50%. (Data sources: Wall Street Journal)

U.S Jobs Rebound

U.S. payrolls added 196,000 jobs in March, a quick return to near the post-crisis average after an unusually weak February where only 33,000 jobs were added. The report showed that while payrolls may be slowing slightly, there are currently no recession indicators flashing from the labor market. Wages also grew at 3.2% compared to 2.8% the year prior and showed that workers are finally seeing incremental gains to their paycheck, albeit late in the cycle. While the payrolls report is considered a lagging indicator that doesn’t give a good read on the current state of the economy, new unemployment claims is and came in at 202,000 for last week, the lowest reading since 1969. All in all the labor market shows that there currently isn’t any worry amongst companies looking to hire workers.  (Wall Street Journal)

How long can this bull market last?

As the bull market, as defined as a period where stocks haven’t fallen more than 20% at any one time, passed its 10th anniversary in March and with the S&P 500 finishing the 4th Quarter up over 13%, Barron’s cover story this week dares to say that this market “has no expiration date”. After December’s tumultuous drop nearly ended the 10 year run, the market has come roaring back to less than 2% of its previous high hit in September. The three strategists interviewed for the article all give their reasoning as to why this market will continue for at least a couple more years and Thomas Lee of Fundstrat Global Advisors goes as far to say that we may be only halfway through this bull market.

Despite a yield curve inversion in March, uncertainties regarding trade deals being worked out across the globe, and rising populism affecting seemingly every election worldwide, these strategists claim that the U.S. stands to continue growing at a respectable rate, continue producing new jobs and increase business investment. Only time will tell whether the pessimists or optimists are correct, but one thing everyone will still need to be prepared for is an increase in volatility like we saw throughout 2018. The famous saying that bull markets don’t die of old age may be true, but cycles do exist and every investor must be prepared to weather the sudden changes that are sure to come. (Barron’s)

Quiz:

What was the best performing sector in the U.S. during the 1st Quarter of 2019?

a. Real Estate

b. Energy

c. Information Technology

d. Industrials

Answer is below…

 

Have a good week!

 

Answer to quiz:

c. Information Technology was the best performing sector posting a 19.59% return followed by Industrials (17.72%), Energy (16.68%), and Real Estate (16.38%). (Morningstar)