Markets “In a Nutshell” for July 30, 2019

Investment Week at a Glance

Stocks finished mostly up for the week.  The Dow Jones Industrial Average was up 0.14%, the S&P 500 rose 1.65%, the New York Stock Exchange Composite (2,000 stocks) rose 0.94% and the average investors index (Value Line Index) was up 1.44%.  Foreign stocks (DJ Global ex U.S.) were down 0.41%.  Bond prices were down for the week, pushing the yield on the 10-year U.S. Treasury up 3 basis points to end the week at 2.08%.  (Data source: Wall Street Journal)

GDP Growth Returns Back to Trend

The 2nd Quarter GDP was released last Friday and showed a slowdown from the 3.1% growth from the 1st Quarter, but came in better than expected at 2.1%. The report overall showed a return to the trend growth that was experienced earlier in the decade, but not the massive slowdown and possible recession that some were predicting last winter. Earnings continue to be released and show a similar picture, with 44% of companies reporting and 77% of those beating a particularly pessimistic set of earnings estimates. Stocks continue to be around record levels, with the S&P 500 setting a new high on Wednesday, as many of the potential issues regarding trade and interest rates gain more clarity. (Barron’s)

China Trade Talks Resume

Trade talks with China are set to begin again this week with member of the White House traveling to Beijing. Expectations are relatively low considering how abruptly the last negotiations ended and not much if anything is expected from this week. Items that could be won over are a concrete agreement by the Chinese to buy agricultural products from the U.S. and for an easing on the trading restrictions of Chinese telecommunications provider, Huawei. Other than that, a plan of action on future meetings is the only probable outcome. While the U.S. negotiation team says they were 90% finished with a trade deal before talks broke down last May, it looks very unlikely that the previous deal will be the starting point for future talks. (Barron’s)

Fed Decision This Week

The Federal Reserve is almost certainly going to cut interest rates by 0.25% this week and likely give further guidance on future rate setting plans. Two points many people will be interested in learning more on is why the Fed is cutting interest rates when the labor market and the economic growth look at largely alright and what the Fed expects 1 or 2 quarter point interest rate cuts to accomplish. While the Fed’s decision for Wednesday is widely expected, the press conference afterwards will be intensely focused on by the market. This has become an event that has captured the attention of everyone since last December and will likely stay that way for the foreseeable future.  (Barron’s)

Quiz:

Facebook was charged a fine of $5 billion by the Federal Trade Commission last week. Based off 2nd quarter earnings, how many days does it take Facebook to make $5 billion in revenue?

 

a)    26

b)    45

c)    97

d)    128

 

Answer below …

 

Have a Great Week!!

 

 

 

Answer to quiz:

a)   It takes about 26 days for Facebook to make $5 billion in revenue. The fine has received an unusual amount of attention for not being enough to curb Facebook’s privacy issues. (Wall Street Journal)