ND&S Weekly Commentary (10/15/18) – Earnings Reports Begins

October 15, 2018

Equity markets declined for a second week as the S&P 500 fell for six consecutive sessions before a rally on Friday. It was its longest losing streak in nearly two years. For the week, the S&P 500 was off 4.07% and the DJIA and the NASDAQ were down 4.17% and 3.74%, respectively. International markets also declined with developed markets down 3.9% and emerging markets were off 2.0%. A combination of factors led to these declines including fears of inflation, a slowing Chinese economy, tariffs, FOMC rate hikes and elevated equity valuations. However, in spite of these concerns the outlook for the U.S. economy and corporate earnings is still positive. Inflation rose a modest 0.1% in September, which came in below expectations for a 0.2% increase. Year-over-year CPI is now 2.3%, which is a deceleration from August’s 2.7% reading. Third-quarter earnings are officially underway with positive reports on Friday from (C) Citigroup and (JPM) J.P. Morgan. This week, corporate earnings announcements continue with 68 companies in the S&P 500 scheduled to report.

Fixed income markets rose as investors looked for a safe haven during last week’s volatility. As a result, the rate on the 10 year U.S. Treasury closed the week at a yield of 3.15%, down from 3.23% the week prior. This week look for economic reports on retail sales and existing home sales.

Investors should resist the urge to try to time the market and instead ensure that portfolios are well balanced and diversified.

“Greatness is a road leading towards the unknown.”Charles de Gaulle