Market Perspective for December 14, 2018

For the week, the Nasdaq slipped 0.84 percent, while both the S&P 500 and Dow Jones Industrial Average lost 1.2 percent.

While the market was down slightly on the week, U.S. economic data was strong. The Job Openings and Labor Turnover Survey (JOLTS) showed 7.1 million openings in October, up from 7.0 million in September. The National Federation of Independent Business’ small business confidence index slipped to 104.8 but remains near all-time highs. The consumer price index, both headline and core, met expectations. The producer price index was higher than expected.

Initial claims for unemployment hit 206,000, well below forecasts of 226,000 and still near 2018 lows. Retails sales rose 0.2 percent in November, stronger than expected. Industrial production was also solid. As a result of positive surprises this week, the Atlanta Federal Reserve’s GDP Now model hiked its 4th quarter GDP growth forecast from 2.5 percent to 3.0 percent.

The odds of a December interest rate increase slipped to 73 percent by Friday. The Fed typically hikes when odds are higher than 70 percent. If the Fed choses to keep rates as is at the meeting next Wednesday, it would be bullish for stocks.

The U.S. Dollar Index climbed 1 percent on the week and closed at a new 52-week high on Friday.

Johnson & Johnson (JNJ) slid 10 percent as a report surfaced that the firm knew about asbestos in its baby powder as far back as 1971. As JNJ is a significant player in the healthcare sector, most sector specific funds were negative on the day.


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