Year: 2018

Strong third-quarter GDP halted an overnight drop in FANG stocks and elevated indexes on Friday. Economic growth hit an annualized 3.5 percent on the quarter, beating the consensus forecast of 3.3 percent. Personal consumption climbed 4.0 percent, up from 3.8 percent in the prior quarter. Inventories expanded as businesses prepared for the holidays, generating 2 percentage points of GDP growth. Imports shaved 1.3 percentage points off GDP growth.

Flash manufacturing and service PMIs reflected strengthening in October. New home sales missed estimates but remained at the low end of the expansion range seen since 2011. Initial claims for unemployment hovered near four-decade lows at 215,000. Durable goods orders rose 0.8 percent, beating a forecast decline of 1.9 percent.

Fed officials’ public remarks this week focused on the potential for additional interest rate increases given incoming data. Although it briefly boosted bond yields, the slide in equities pushed December rate hike odds to 70 percent.

The U.S. Dollar Index gained 0.7 percent this week. Crude oil declined 2.4 percent, up from a loss of 4 percent midweek. iShares 20+ Year Treasury (TLT) gained 1.13 percent as interest rates fell. The 10-year treasury yield closed at 3.08 percent on Friday, down from Monday’s close of 3.20 percent.

Earnings were responsible for much of the week’s volatility. Companies that disappointed investors were hit with steep losses. Advanced Micro Devices (AMD) fell more than 30 percent on the week after it disappointed. Amazon (AMZN) slid more than 10 percent. Equifax (EFX) shares lost more than 20 percent as costs associated with that scandal bit into profits. Caterpillar (CAT) and 3M (MMM) hurt the Dow Jones Industrial Average after they missed earnings. Shares fell 12.39 and 7.45 percent, respectively, on the week. Even Budweiser (BUD) suffered a loss of 11.66 percent following earnings.

Semiconductor supplier Teradyne (TER) fell only 1.28 percent on the week after strong earnings boosted shares more than 8 percent midweek. Boeing (BA) gained 0.84 percent on the week. McDonald’s (MCD) was a standout gainer, rising 3.49 percent after positive earnings.

The past few weeks have been challenging for investors.  Nevertheless, the economy continues to improve. This most recent sell-off was inevitable, given the run-up in technology stocks in 2018.

If you are concerned with recent volatility and your current portfolio allocations, we would be happy to provide you with a complimentary review. We can help you determine if your portfolio is properly positioned for current market conditions and discuss if there are changes you should consider. Please call us at (844) 336-9878 ext. 1006 to learn more.

Equities were mixed on Monday. SPDR Technology (XLK) gained 0.83 percent and SPDR Financial (XLF) slid 2.17 percent. The Nasdaq index performance with an increase of 0.26 percent.

Third-quarter GDP growth will be out on Friday. The consensus forecast calls for 3.4 percent. The Atlanta Federal Reserve predicted 3.9 percent as of Monday. Their model’s final estimate will be out on Thursday.

Flash manufacturing PMIs are due on Tuesday. U.S. manufacturing PMIs improved in September while China and Europe weakened.

New home sales for September will also be out on Tuesday. Analysts see sales easing very slightly to an annualized pace of 620,000 from August’s 629,000.

The odds of a December rate hike stood at 84 percent on Monday. The market puts the odds of another hike by June 2019 at 80 percent.

The U.S. Dollar Index rallied 0.32 percent on Monday with Brexit troubles weighing on the pound and Italy weighing on the euro. Gold slipped 0.22 percent in response. Crude oil only managed to gain a nickel on the day.

Halliburton (HAL) beat earnings expectations on Monday, but its stock fell 3 percent on the day with the broader energy sector. The oilfield services company lowered fourth-quarter guidance to a range of 37 to 40 cents, below Wall Street’s consensus of 47 cents. After the bell, Zions Bancorp (ZION) reported earnings of $1.04 per share in the prior quarter, beating by 8 cents. Shares fell 3.45 percent in regular hours trading, but rebounded 2 percent following the announcement.

Caterpillar (CAT), 3M (MMM), Biogen (BIIB), McDonald’s (MCD), Illumina (ILMN), Lockheed Martin (LMT), Regions Financial (RF), Harley-Davidson (HDI) and Capital One Financial (COF) will report on Tuesday.

Advanced Micro Devices (AMD), Boeing (BA), Ford (F), Hilton (HLT), Boston Scientific (BSX), Illinois Tool Works (ITW), Freeport-McMoRan (FCX) and Equifax (EFX) will report on Wednesday.

On Thursday, investors will hear from Amazon (AMZN), Comcast (CMCSA), Baidu (BIDU), Celgene (CELG), Bristol-Myers (BMY), ConocoPhillips (COP), American Airlines (AAL) and CME Group (CME).

Colgate (CL), Phillips 66 (PSX), Charter Communications (CHTR), Rockwell Collins (COL), Goodyear (GT) and Moody’s (MCO) will close out the week.

Value stocks resumed leadership this week and the Dow Jones Industrial Average gained 0.39 percent to lead all major indexes. The Nasdaq lost 0.63 for the week as semiconductors weighed on Friday.

SPDR Consumer Staples (XLP) and SPDR Utilities (XLU) rallied 4.45 and 3.08 percent. SPDR Financials (XLF) and SPDR Healthcare (XLV) advanced 0.89 and 0.44 percent. SPDR Technology (XLK) declined 1.16 percent. iShares PHLX Semiconductor (SOXX) shed 2.10 percent.

Federal Reserve minutes confirmed officials’ plan to raise rates beyond the “neutral rate.” The odds of a December rate hike rose to 84 percent. Treasury yields rose as well, with the 10-year briefly trading above 3.20 percent mid-week. The 52-week high is 3.25 percent.

September retail sales matched August’s growth rate of 0.1 percent but missed estimates. Sales-ex autos fell 0.1 percent.

The Empire State index, the New York Fed’s measure of manufacturing in its territory, climbed in October. The Philly Fed’s manufacturing index also rose in October. These reports comport with improving manufacturing PMIs for September.

Job openings remained steady at 7.1 million in August. Initial claims for unemployment were 210,000, meeting expectations and down from the prior week’s 215,000.

The homebuilder confidence index rose in October with thanks to rising demand. Housing starts, building permits and existing home sales were all slightly below estimates.

Chinese economic data showed continued slowing. The Chinese government reported GDP growth of 6.5 percent in the third quarter, the slowest result in a decade. Fixed-asset investment and retail sales for September reflect China’s shrinking growth rate.

The U.S. dollar climbed against the euro this week. The European Commission didn’t reject Italy’s budget, but it said it was against EU rules. A confrontation could escalate on October 31, when Italy’s parliament votes on the budget. SPDR S&P 500 (SPY) gained 0.09 percent on the week. It outperformed iShares MSCI EAFE (EFA) and iShares MSCI Emerging Markets (EEM), which fell 0.14 and 1.49 percent, respectively.

Banks delivered solid earnings this week, following up on last week’s strong reports. Bank of America (BAC) beat forecasts by 4 cents. Goldman Sachs (GS) and Morgan Stanley (MS) also beat. American Express (AXP) also beat and had one of the best stock performances within the sector.

Netflix (NFLX) smashed estimates and shares jumped after hours, but weakness in tech pulled the stock down on the week.

Johnson & Johnson (JNJ), UnitedHealth Group (UNH) and Abbot Labs (ABT) all beat earnings. Proctor & Gamble (PG) surprised investors with a very strong earnings report. Shares popped 8.8 percent on the day and boosted consumer staples performance.