Market Perspective for September 28, 2018

The Nasdaq climbed 0.74 percent. SPDR Technology (XLK) rallied 0.95 percent and SPDR Healthcare (XLV) rose 0.89 percent. Although the 10-year treasury yield crossed 3.10 percent mid-week, it ended down for the week at 3.06 percent. Utilities rallied in response to lower rates, while financials declined.

The Dow Jones Industrial Average led third-quarter index performance with a gain of 9.01 percent. The S&P 500 Index climbed 7.20 percent, the Nasdaq 7.14 percent and the Russell 2000 3.26 percent.

SPDR Healthcare (XLV) advanced 14.45 percent in the third quarter, SPDR Industrial (XLI) 9.98 percent, and SPDR Technology (XLK) 8.80 percent.

The Federal Reserve hiked interest rates a quarter point this week, as expected. The accompanying policy statement removed language calling the current level of interest rates “accommodative.” Interest rate forecasts over the next two years moved in a slightly hawkish direction. The odds of a fourth rate hike at the December meeting, peaked at 83 percent on Thursday before ending the week at 76 percent.

New home sales reached an annualized pace of 629,000 in August, better than the consensus forecast of 625,000. The third and final estimate of second-quarter GDP growth held steady at 4.2 percent. August personal income, consumer consumption and core inflation numbers all missed forecasts, but only by 0.1 percentage points. Durable goods orders climbed 4.5 percent in August, beating estimates of 2.2 percent and above July’s decrease of 1.2 percent.

Consumer confidence surged in September to 138.4, the highest since the year 2000. Crude oil rallied past $73 a barrel this week. The high for the year is $75 a barrel, set in early July.

The Fed rate hike and a resumption of debt worries in Italy sent the greenback higher by 1 percent this week. Nearly all gains came at the expense of the euro and yen. Emerging-market currencies rallied. WisdomTree Emerging Markets Currency (CEW) rose 0.55 percent.  iShares MSCI EAFE (EFA) and iShares MSCI Emerging Markets (EEM) fell 0.95 and 0.72 percent, respectively. For the quarter, SPDR S&P 500 (SPY) gained 7.65 percent, handily beating EFA and EEM’s returns of 1.51 and negative 0.95 percent.

Nike (NKE) delivered solid earnings results, but shares dipped 0.97 percent for the week.

Shares of Tesla (TSLA) fell 11.48 percent on the week after the SEC announced it was suing CEO Elon Musk. The SEC is focused on Elon’s tweet about having “funding secured” for going private at $420 per share. They want Musk barred from being an officer in any public firm.


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