Weekly market update

The major averages finished down for the second straight week; however, for the month of September the Dow gained 2%, the S&P 500 advanced 1.7% and the NASDAQ added 0.5%. For the quarter, the Dow and the S&P 500 both rose 1.2%, but the NASDAQ fell 0.1%.

The financial news last week was highlighted by good old fashion politics here at home and in Europe. In the UK, their Supreme Court ruled that Boris Johnson, Britain’s Prime Minister, acted unlawfully when he dismissed Parliament early in September—which will intensify Brexit tensions in the weeks ahead. Here at home, House Speaker, Nancy Pelosi, announced an official impeachment inquiry for President Trump over a phone call with the President of Ukraine. The threat of ousting the President from office contributed to market volatility, but with few believing that it will hit the two-thirds of the Senate required for conviction. The market’s reaction was relatively muted, with stock markets edging modestly lower and bond yields down a few basis points.

Meanwhile, the U.S./China trade spat continues to simmer. Washington and Beijing sent out mixed signals throughout the week. The President noted he would not except a bad trade deal with China, but later in the week he stated: “A deal could come sooner than you think.”

The erratic nature of trade talks has taken its toll on consumer confidence levels. The latest consumer confidence numbers were the lowest in 9 months. The downturn in expectations could see consumers hold back on spending, which did slow more than expected in August, but incomes rose more than expected.

Outside of trade tensions, Traders and Investors had a lot to digest during September and the third quarter—global growth concerns, the FED, recessionary concerns, geopolitics and a hot mess of politics here at home. It’s enough to make a bobblehead’s brain explode.

We did get some good news out of the housing market, with new and existing home sales came in better than expected thanks to falling rates and inflation continue to be below the FED’s target rate. Finally, the Chicago FED National Activity Index rose to +0.10 in August, up from -0.41 in July, led by improvements in production-related indicators, suggesting a pickup in economic growth over the last month.

Looking ahead, we get the latest read on jobs this Friday and combined with a few other reports due out before the FED meets at the end of the month, we could be looking at the third rate cut in as many months. Earnings season will kick off October 15th with JP Morgan and other big banks leading the way. Analysts are still calling for a decline in earnings and revenue growth for the previous quarter. We’ll be monitoring any new developments on trade and we’ll keep you posted, so stay tuned.

Todd Day, MBA
Portfolio Manager
Horizon Financial Services, LLC

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