Market Perspective for September 14, 2018

Technology, consumer discretionary, industrials and healthcare led the market this week. The Nasdaq gained 1.36 percent.

Software heavyweight Microsoft (MSFT) advanced this week, boosting iShares North American Software (IGV) 3.54 percent higher. SPDR Technology (XLK) gained 1.85 percent. Netflix (NFLX) lifted SPDR Consumer Discretionary (XLY) 1.16 percent. iShares U.S. Medical Devices (IHI) advanced 2.61 percent and heavily influenced SPDR Healthcare’s (XLV) gain of 1.06 percent. SPDR Industrial (XLI) increased 1.91 percent, despite tariff rhetoric.

The National Federation of Independent Business small business confidence index reached a new all-time high in August. The prior record was set in 1983.

Job openings rose again in July, to an all-time high of 6.9 million. Job openings have exceeded unemployed workers since April.

Inflation rose slower than forecast in August. Producer prices fell 0.1 percent and missed expectations of a 0.2 percent increase. Consumer prices increased 0.2 percent and core prices rose 0.1 percent. Both missed by 0.1 percentage points. Speculations are still betting on two more hikes this year, one later this month and another in December.

Initial claims for unemployment slumped to 204,000 last week. It’s the lowest weekly figure since December 1969. The 4-week moving average fell to 208,000.

August retail sales missed forecasts of 0.3 percent growth, coming in at 0.1 percent. Sales ex-autos were up 0.2 percent. While autos were partly responsible for the retail sales miss, the sector was also responsible for a surprise uptick in August industrial production to 0.4 percent growth. These strong reports boosted the Atlanta Federal Reserve’s GDP Now third-quarter GDP growth forecast from 3.8 to 4.4 percent.

The University of Michigan’s Consumer sentiment exceeded expectations in early September. The index had been running slightly cooler than the Conference Board’s measure and economists forecast a reading of 96.2, but it jumped to 100.8. Current economic conditions climbed with consumer expectations. Aside from a higher reading earlier this year, the last time the index was this high was back in 2004.

Bond yields rallied along with solid economic data this week. The 10-year Treasury traded above 3 percent for the first time in six weeks. The 5-year yield hit a four-month high. Crude oil rallied above $70 a barrel mid-week on a surprise inventory draw but gave back most of the gains. It finished at $69 a barrel.

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