Weekly market update
The Dow, S&P 500 and the NASDAQ were on track for a winning week, but all went negative on the week following Friday’s big selloff where the Dow fell more than 500 points and the S&P and NASDAQ fell more than 2%.
The issues that plagued the markets in the 1st quarter continue to be the issues that are plaguing it in the 2nd quarter – or at least for the first few days of the 2nd quarter. Technology stocks continued to get clobbered as the President won’t back off Amazon and China authorized retaliatory tariffs on over 120 U.S. products. Trade wars/disputes, interest rates, the FED, NAFTA and the chaos coming from the White House all causing investors to focus on the negatives.
Dow Jones Industrial Average (DJIA) is now off more than 11% from its peak in January, signaling an official market correction. 330 of the S&P 500 stocks have hit 52-week highs this year. Of those, 46 are down 20% or more. Talk about volatility…
ECONOMY
Although the major averages have been on a rocky path, the economy still looks to be on solid footing, and that picture didn’t change much last week despite a big miss on the jobs report.
Economists were expecting the economy to add around 190,000 jobs but we only added 103,000 – a big miss! But the trend in jobs being added, when you look at the rolling averages, still looks good. The unemployment rate held at 4.1%. Some blame the big miss on seasonal adjustments and the weather, so we’ll have to see how April’s job picture looks to see if the trend is changing. I think it is going to be hard to keep adding 300,000 jobs every month because we are running out of skilled workers.
We also got two manufacturing reports – ISM and PMI manufacturing indices and both came in a bit shy of estimates, but still running at high levels.
THIS WEEK
Earnings season will kick off this Friday when we will hear from a number of the big banks. This earnings season is supposed to be one of the best in a while so the banks need to get us off on the right foot.
There is not much on the economic calendar this week, but all eyes will be on the producer price index and the consumer price index for signs of inflation.
We’ll be watching to see how the “trade war” chatter will further impact the markets, so stay tuned and we’ll keep you posted.
Todd Day, Portfolio Manager
Horizon Financial Services, LLC
April 9, 2018
