Weekly Update

The Weekly Update

Week of April 15, 2019
By Christopher T. Much, CFP®, AIF®

The Week on Wall Street
Stocks broke out of a narrow range on Friday following news that two major banks grew their bottom line in the first quarter. For the week, the S&P 500 rose 0.79%; the Nasdaq Composite, 0.91%. The Dow Jones Industrial Average improved 0.50%. Turning to overseas stocks, the MSCI EAFE index declined 0.09%.

The market spent much of the week in a lull as investors waited for earnings season to begin. Wall Street is paying close attention to both guidance and profit margins.

Big Banks Post Solid Results
Friday, Wells Fargo and JPMorgan Chase both reported Q1 profit growth, and JPMorgan Chase announced record revenue.

This was welcome news. Analysts have tempered some of their expectations entering this earnings season, recognizing that slowing global growth, tariffs, and dollar strength may be affecting corporate profits. The dollar rallied 6.2% …

The Weekly Update

Week of April 8, 2019
By Christopher T .Much, CFP®, AIF®

The Week on Wall Street
Stocks just posted their second straight weekly gain. Investors were encouraged by the latest jobs report and new signs of progress on a U.S.-China trade deal. The Dow Jones Industrial Average advanced 1.17% in five trading days; the S&P 500, 1.27%; the Nasdaq Composite, 1.72%. The MSCI EAFE index of international stocks improved 1.84%.

The economy generated 196,000 net new jobs in March, according to the Department of Labor. Monthly job growth averaged 180,000 in the first quarter. Both President Trump and Chinese Vice Premier Liu He told the media last week that the U.S. and China were getting closer to a new trade accord.

Meanwhile, a week into the second quarter, another earnings season is about to unfold. As we await results, we will take a brief look back at what happened in the …

The Weekly Update

Week of April 1, 2019
By Christopher T. Much, CFP®, AIF®

The Week on Wall Street

Stocks ended last week higher as volatility slowed, completing their best quarter since 2009. A Friday tweet from Treasury Secretary Steven Mnuchin encouraged investors, referring to “constructive” discussions in the ongoing U.S.-China trade negotiations.

The S&P 500 gained 1.27% for the week. The Dow Industrials and Nasdaq Composite both exceeded that advance: the Dow rose 1.60%; the Nasdaq, 1.42%.

Foreign shares went the other way. The MSCI EAFE index following international stocks retreated 0.91%.

2019 Could Be a Big Year for IPOs

One of the ride-share pioneers, Lyft, closed on its initial public offering (IPO) on Friday, and a glance at the IPO calendar shows that as many as 226 companies could soon go public, with Uber and Airbnb possibly among them.

This IPO wave may be a signal of a market top, or it may point to …

The Weekly Update

Week of March 25, 2019
By Christopher T. Much, CFP®, AIF®

The Week on Wall Street

Friday, the yield of the 3-month Treasury bill exceeded the yield of the 10-year Treasury note for the first time in 12 years. For some analysts, this “inverted yield curve” may imply a short-term lessening of confidence. (Treasury yields move inversely to Treasury prices.)

As a result, the S&P 500 ended the week 0.94% lower. The Nasdaq Composite fell 0.80%, and the Dow Industrials lost 1.19%.

In contrast, the MSCI EAFE index following international stocks rose, gaining 0.52% for the week.

Fed Sees No Hikes in 2019

On Wednesday, the Federal Reserve held interest rates steady, but lowered its estimate of 2019 economic growth to 2.1%.

Last December, the central bank forecast two rate hikes in 2019. It now expects to leave rates unchanged this year, with one quarter-point hike projected for 2020.

This pivot may acknowledge a slight …

The Weekly Update

Week of March 18, 2019
By Christopher T. Much, CFP®, AIF®

The Week on Wall Street

The big story last week was the sudden grounding of Boeing 737 Max 8 and 9 passenger jets in dozens of countries. The financial effects of this ban could potentially impact the airline industry and segments of the economy for months.

While the news created a headwind for the Dow Industrials, stocks managed to post solid gains for the week. The Nasdaq Composite rose 3.12%; the S&P 500, 2.46%; the Dow, 2.25%.

Bullish sentiment was also evident overseas. Looking at the MSCI EAFE index, international stocks advanced 1.93%.

Trade Meeting Delayed

Wall Street expected President Trump and Chinese President Xi to discuss trade issues this month. Thursday, Bloomberg reported that their talk had been postponed, with no firm date ahead.

Muted Inflation

The latest Consumer Price Index showed just a 1.5% rise in overall consumer costs in the …

The Weekly Update

Week of March 11, 2019
By Christopher T. Much, CFP®, AIF®

The Week on Wall Street

As in February, investors spent most of the first full trading week of March hoping for new details in U.S.-China trade negotiations. While they waited, stock benchmarks drifted downward. From Monday’s open to Friday’s close, the S&P 500 lost 2.55%, while the Dow Industrials took a 2.66% fall, and the Nasdaq Composite weakened 3.12%. The MSCI EAFE index tracking developed markets outside the U.S. and Canada fell 1.09%.

Why did stocks lose momentum? In a hint that global economic growth might be slowing, the European Central Bank abruptly reduced its 2019 Gross Domestic Product forecast for the eurozone from 1.7% to 1.1%. A disappointing reading on U.S. hiring also raised questions.

Perplexing Jobs Data

According to the Department of Labor, the economy generated only 20,000 net new jobs in February. This was the smallest monthly gain …

The Weekly Update

Week of March 4, 2019
By Christopher T. Much, CFP®, AIF®

The Week on Wall Street

Stocks lost a little ground as February gave way to March. While domestic and overseas political developments made headlines, the market stayed relatively calm: from Monday’s open through Friday’s close, the S&P 500 ceded just 0.17%, finishing the week at 2,803.69.

The Dow declined 0.65% in five trading sessions to 26,026.32, while the Nasdaq finished the week 0.06% higher at 7,595.35. The MSCI EAFE index of international stocks rose 0.24% for the week.

Volatility has dropped in the past few weeks. Wall Street has grown less anxious about the possibility of new tariffs and higher interest rates this year.

Powell Shares His Outlook

Last week, Federal Reserve Chairman Jerome Powell told the Senate that Fed officials would take a “patient approach” with regard to future interest rate moves. Powell called the economy “healthy,” but noted that “conflicting …

The Weekly Update

Week of February 25, 2019
By Christopher T. Much, CFP®, AIF®

The Week on Wall Street
Stocks rallied last week as optimism about a potential U.S.-China trade deal grew. The S&P 500 advanced 0.80% during the 4-day trading week to 2,792.67. The Nasdaq Composite improved 0.86% to 7,527.54, and the Dow Jones Industrial Average gained 0.64% to 26,031.81.

The renewed prospects for a trade pact were not the only development investors found appealing last week. There were indications that the Federal Reserve might be a bit less committed to its plans to raise interest rates further this year.

A Look at the Fed Minutes
There were no surprises from the Federal Reserve’s Board of Governors, who released the transcript from their January meeting on Tuesday. Investors pore over the meeting minutes looking for clues about the Fed’s next move on short-term interest rates.

Fed policymakers appeared split on what’s next. Some felt another …

The Weekly Update

Week of February 18, 2019
By Christopher T. Much, CFP®, AIF®

The Week on Wall Street
Stocks ended a good week on a high note, as hints of progress in U.S.-China trade talks encouraged investors.

When the closing bell rang Friday, the S&P 500 settled at 2,775.60, after rising 2.50% in five days. The Dow Industrials gained 3.09%, to close Friday at 25,883.25. The Nasdaq Composite improved 2.39% to 7,472.41.

Shutdown Averted
Wall Street breathed a sigh of relief late last week as Congress passed a bill to keep the federal government funded. President Trump signed the measure on Friday.

The development is expected to have a positive effect on consumer sentiment, which may influence the financial markets. During the shutdown, consumer confidence hit an 18-month low.

Retail Sales Unexpectedly Slip
Thursday, the Census Bureau announced that retail sales fell 1.2% in December. This was the largest monthly decline in more than nine years and …

The Weekly Update

Week of February 11, 2019
By Christopher T. Much, CFP®, AIF®

The Week on Wall Street
Major U.S. stock benchmarks eked out slight gains last week, with corporate profit reports and news about U.S.-China trade negotiations vying for investor attention over five trading sessions.

The big three ended the week little changed from where they settled the previous Friday. The Dow Jones Industrials rose 0.17% percent, while the S&P 500 Index gained 0.05% percent. The NASDAQ Composite ended the week up 0.47%. Looking at international stocks, the MSCI EAFE index retreated 0.47%.

Earnings Scorecard
As of last Friday, 66% of all S&P 500 companies had reported fourth-quarter earnings. So far, 71% of these firms have announced earnings exceeding estimates, and 62% have seen revenues top projections

Halfway through earnings season, 2019 future guidance has been a mixed bag for S&P 500 companies. For Wall Street, future earnings can be just as important as …