2018 Market Letter Q3
Good News on the Jobs Front
Expectations and events often explain market movement. With earnings season underway next week, every earnings report will be judged on whether those expectations were exceeded, met or missed. Perhaps the most important aspect is if future growth outlook meets expectations.
Stressed Out
Over the last month, financials and industrials have been the two worst performing sectors in the S&P 500. While the industrials sector can be explained due to the strengthening U.S. dollar and trade rhetoric, financials have been more perplexing.
Short Stories
Trade concerns weighed on stocks this week resulting in a 1 percent decline for the S&P 500, and the Dow Jones Industrial Average falling close to 2 percent. Large-cap industrial stocks have taken the brunt of the pain due to their exposure to export markets, as well as increasing steel and aluminum costs due to recent tariffs.
Cole Joins Ferguson Wellman’s Board of Directors
Ralph Cole, CFA, is Ferguson Wellman’s new director. He joins the current board that includes Dean Dordevic, Steve Holwerda, CFA, George Hosfield, CFA and Jim Rudd.
Action and Reaction
With just a couple of weeks left to go in the second quarter, investors wanting for a lack of earnings news found plenty of economic reports and central bank meetings to freshen up their views of the macroeconomy.
Resources Worth Routing: The GDPR Effect on Your Inbox
Winning in Later Innings
In recent weeks, investors and economists alike have been questioning the sustainability of the current backdrop of strong global growth and are considering the longevity of the current expansion. No doubt, economic data out of Europe has been weak and some U.S. data has moderated from very strong levels.
Quitaly
News of political uncertainty in Italy, trade disputes and a strong employment number for May injected volatility into the U.S. stock market, with the S&P 500 ending up .43 percent for the week and U.S. Treasury bond prices moving higher, with the yield on the 10-year bond ending the week at 2.89 percent.
A New Face
The markets had to digest weighty geopolitical headlines this week with tariffs, North Korea and a messy political landscape in the European Union dominating the news cycle.
More Bang for Your Buck
In our annual economic Investment Outlook, we predicted that interest rates would rise but not enough to derail the expansion. At the same time, we anticipated that the conflicting signals of robust earnings growth and above-average valuation would settle somewhere in the middle.
The Hardest Thing to Understand, According to Einstein
According to Einstein, what’s the hardest thing to understand in the world? Josh Frankel, CFP, helps find relativity between taxpayers and wealth planning, particularly charitable-giving strategies.
Texas Tea
One of the four takeaways in our 2018 Outlook was, “It’s the Economy,” meaning that over the long term, financial markets tend to do a good job shrugging off headline risk and political drama. Instead, markets focus on the health of the economy. This attribute was once again demonstrated this week with equity markets gaining more than 2 percent despite heightened geopolitical tension as the U.S. formally exited the 2015 Iran nuclear deal.
A Tale of Two Headlines
Charles Dicken’s iconic tome illustrates aptly the interplay between earnings news and economic news of late. Every day it seems good earning news is complemented with slowing economic news and vice versa. Recent market volatility has pushed cautious investors to the sidelines and those that remain are riding the markets up and down with every recent news release.
Choose Your Own Adventure
Stock markets were essentially flat for the week, but individual stocks gyrated with earnings announcements. Economic data continues to be solid, but not spectacular. First quarter U.S. GDP came in at 2.3 percent, marking the fastest first quarter growth since 2015. Interest rates were essentially unchanged for the week as well.
iCan't Afford This
Stocks and bonds moved in opposite directions as the S&P 500 finished positive on the week despite falling nearly 2 percent between Thursday and Friday. Bonds, on the other hand, declined due to higher interest rates.
Back to Basics
With this week’s latest rebound, the S&P 500 has now closed up or down more than 1 percent 27 times year-to-date ‒ this is more than three times the daily volatility that investors experienced in 2017. Accompanying higher stock prices, safe-haven bonds retreated modestly.
Q2 2018 Investment Strategy Video
Lago Honored at Women of Influence Awards
Mary Lago, CFP, CTFA, was honored at the Portland Business Journal’s annual Women of Influence award.
It's Always Something
With trade tensions picking up, the S&P 500 experienced a wild ride this week, ending the week declining more than 1 percent. The first week of trading in the second quarter experienced huge intraday swings, highlighted by Wednesday’s volatility.