ND&S Weekly Commentary 11.5.18 – Spooky October is Over!

November 5, 2018

Last week investors breathed a sigh of relief as markets rebounded.  October was a scary month as stocks fell 6.9%, which was their worst monthly performance since September 2011.  Thankfully, stocks finished higher helped by a solid jobs report, positive earnings, and the signs of progress in China trade negotiations.

All major equity markets performed well with both the Dow Jones Industrial Average and S & P 500 returning 2.4%.  Smaller stocks did very well, as the Russell 2000 gained 4.35%.  The NASDAQ was up 2.7% despite a 7% decline in Apple shares, which suffered, as a result of the company’s lower revenues and guidance.  International equities were the real winners.  Developed International (EAFE) gained 3.4% while emerging equities (EM) returned 6.1%.

On Friday, the Labor Department reported that employers added 250,000 jobs in October, beating all consensus estimates.  The unemployment rate remained at 3.7% and wages increased 3.1%.  Economists have been watching data closely for signs of inflationary pressures.  Interest rates, which rise as bond prices fall, climbed after the solid job report.  The 10-Year Treasury rose to 3.21%, its highest over the last few weeks.

Oil prices plummeted 7% to $62.86 a barrel.  Earlier last month, concern over Iranian sanctions and a reduction in crude supply drove the price of oil to $86 a barrel.

The third quarter earnings season is winding down with the 76 companies, in the S & P 500 reporting this week.  Major economic news will include services PMI today, the Federal Reserve’s minutes, and consumer sentiment on Friday.  Tomorrow, impactful and melodramatic mid-term elections will stir the political pot for a while so be prepared for more volatility.  We strongly recommend investors be patient and stay the course.  Please do not abandon goals and objectives based on emotional responses to market volatility and headline news.

“We live in a world where we need to share responsibility.  It’s easy to say, “its not my child, not my community, not my world, not my problem.”  Then there are those who see the need and responding consider those people my heroes”—Mr. Rogers