Weekly Market Review

Weekly Update: Markets Rebound  – December 3, 2018

U.S. markets ended a volatile month on a high note Friday. All three major indices posted impressive increases for the week, buoyed by news from the Fed Reserve and international trade (1).  The S&P 500 jumped 4.85%, and the NASDAQ finished up 5.64%—both gains are almost 7-year highs. (2)  Meanwhile, the Dow experienced a 2-year high, increasing 5.16% (3).  Internationally, the MSCI EAFE rose 0.95% (4).  

 
To better understand last week’s sharp rebound, let’s take a closer look at details surrounding comments by Fed Chairman Jerome Powell and various international developments.


Fed Developments
Last Wednesday, Powell inspired optimism in investors by claiming that interest rates are close to the current neutral range of 2.5–3.5%. His comments seemed to suggest that the Fed may throttle back interest rate hikes (5).  However, minutes released on Thursday from the central bank’s meeting contained no indication that the Fed had changed its policy. Therefore, we can only assume the Fed still plans on a fourth rate hike in 2018, and increases may continue during 2019, but we need to wait for more clarity from the Fed (6).  


The G20 Summit
At the annual G20 summit, leaders from the world’s 19 biggest economies and the European Union assembled in Buenos Aires. This group represents 85% of the world’s economic output and 2/3 of its population (7).  Here are a few key takeaways from the summit:


• United States–Mexico–Canada Agreement:

On November 30, President Trump met with Canadian Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto. They signed the anticipated United States¬–Mexico–Canada Agreement (USMCA) to replace NAFTA. With the recent U.S. tariffs on Canadian steel and aluminum causing tension, the USMCA may start to ease the strain, although some remain skeptical. Plus, the agreement still needs to pass Congress. Its true outcome is still unknown (8). 


• Trade Talks with China
President Trump and China’s President Xi met on December 1 to attempt resolving trade issues between the two countries. Since last July, the U.S. has hit Chinese goods with a total of $250 billion in tariffs and has threatened more. In turn, China retaliated by imposing $110 billion in tariffs on U.S. products (9).  Ultimately, both countries agreed to delay any increases in tariffs for 90 days, while they attempt to iron out remaining disputes. If they cannot reach an agreement, President Trump says he will raise rates from 10% to 25% (10). 

• Other G20 Concerns
Low oil prices and oversupply continue to worry investors. The leaders from two of the three largest oil-producing countries, Russia and Saudi Arabia, met to discuss reducing production and raising prices (11).  In addition to trade issues and oil, G20 leaders are grappling with different views on climate change and the new spat between Russia and the Ukraine (12). 


Stay Focused
While the Fed and geopolitical issues dominate the news cycle, we’re here to remind you to keep market fundamentals in mind. As a whole, the economy looks strong through 2018 (13).  For example, last week we learned:

  • Consumer confidence remains high, though it fell slightly in November. This dip follows an 18-year sustained peak in positive territory (14).
  • Q3 Gross Domestic Product increased a solid 3.5%. Business investments performed better than expected, with corporate profits boosting to a new 6-year high (15).
  • Unemployment lowered to 3.7%, the lowest it has been in at least 48 years (16).

As always, we remain dedicated to helping you navigate your financial life amidst economic and geopolitical news. If you have questions about how this information may affect your portfolio, contact us today. 

ECONOMIC CALENDAR

Monday: PMI Manufacturing Index

Wednesday: ISM Non-Manufacturing Index

Thursday: Factory Orders

QUOTE OF THE WEEK

“Many folks think they aren’t good at earning money, when what they don’t know is how to use it.”

— Frank A. Clark

Tired of Being Tired?

You’re tired all the time. So, so tired. You sometimes feel you can’t even do your normal, daily activities. 


So, what’s wrong? You may have chronic fatigue syndrome (CFS). While CFS has no obvious causes and is hard to diagnose, you can treat the symptoms and find relief.Health-care professionals look for patterns of symptoms, including faulty immune systems, viral infections, or stress.


CFS differs from the normal fatigue many of us may feel on occasion. CFS’ overwhelming fatigue may last up to six months or longer. 


If you have CFS, you may also experience chronic pain, headaches, sore throat, and muscle and joint pain.


Other symptoms may include:

  • Memory problems
  • Trouble concentrating
  • Sleep problems
  • Dizziness

Women are four times more likely than men to suffer CFS, which afflicts more than a million Americans. 

Health-care professionals diagnose CFS primarily by ruling out other conditions. While CFS has no cure, treatment strategies can help alleviate its symptoms and help you “feel” better.


Medications may help with some symptoms, such as sleep problems. Counseling can help you cope with the anxiety, depression, or anger that sometimes coincides with CFS. 


Healthy, balanced, and responsible living may lead to long periods of remission. Learning to manage your activity levels can greatly improve your condition as well.


Tips adapted from WebMD (17)

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Footnotes, disclosures and sources:

Investment advisory services are provided through Penn Investment Advisors, Inc. (PIA), a Registered Investment Adviser. PIA is a wholly-owned subsidiary of Penn Community Bank (Bank). Investment products, securities and services offered by PIA are not a deposit of, or obligation of, or guaranteed by the Bank, or an affiliate of the Bank, are not insured by the FDIC or any agency of the United States, the Bank, or any affiliate of the bank and involve investment risk, including the possibility of loss of principal.  

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Diversification does not guarantee profit nor is it guaranteed to protect assets.

 International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.

The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.

The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.

The S&P U.S. Investment Grade Corporate Bond Index contains U.S.- and foreign-issued investment-grade corporate bonds denominated in U.S. dollars.

The SPUSCIG launched on April 09, 2013. All information for an index prior to its Launch Date is back-tested, based on the methodology that was in effect on the Launch Date. Back-tested performance, which is hypothetical and not actual performance, is subject to inherent limitations because it reflects application of an Index methodology and selection of index constituents in hindsight. No theoretical approach can take into account all of the factors in the markets in general and the impact of decisions that might have been made during the actual operation of an index. Actual returns may differ from, and be lower than, back-tested returns.

The S&P/Case-Shiller Home Price Indices are the leading measures of U.S. residential real estate prices, tracking changes in the value of residential real estate. The index is made up of measures of real estate prices in 20 cities and weighted to produce the index.

The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. 

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Past performance does not guarantee future results.

You cannot invest directly in an index.

Consult your financial professional before making any investment decision.

Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

These are the views of Penn Investment Advisors, Inc., and other listed sources. This should not be construed as investment advice. Penn Investment Advisors, Inc., does not give tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information. By clicking on these links, you will leave our server, as they are located on another server. We have not independently verified the information available through this link. The link is provided to you as a matter of interest. Please click on the links below to leave and proceed to the selected site.


[1] https://www.reuters.com/article/us-usa-stocks/wall-street-rises-on-trade-hopes-sp-nasdaq-post-best-weeks-in-7-years-idUSKCN1NZ1EZ

[2] http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX&region=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/[email protected]

https://www.reuters.com/article/us-usa-stocks/wall-street-rises-on-trade-hopes-sp-nasdaq-post-best-weeks-in-7-years-idUSKCN1NZ1EZ

[3] http://performance.morningstar.com/Performance/index-c/performance-return.action?t=%21DJI&region=usa&culture=en-US

https://www.cnbc.com/2018/11/30/stocks-set-to-open-mixed-as-high-stakes-g-20-puts-trade-in-spotlight.html

[4] https://www.msci.com/end-of-day-data-search

[5] https://www.cnbc.com/2018/11/28/markets-see-fewer-rate-hikes-in-powell-comments.html

https://www.cnbc.com/2018/11/28/forex-markets-dollar-the-fed-us-china-trade-in-focus.html

[6] https://www.bankrate.com/banking/federal-reserve/fomc-recap/

[7] https://www.g20.org/en/g20/what-is-the-g20

[8] https://www.reuters.com/article/us-g20-argentina-usmca/u-s-canada-mexico-sign-trade-deal-trump-shrugs-off-congress-hurdle-idUSKCN1NZ0HE

[9] https://www.cnbc.com/2018/11/30/timeline-of-us-china-trade-war-as-trump-and-xi-meet-at-g-20-in-argentina.html

[10] https://www.cnbc.com/2018/12/01/us-china-wont-impose-additional-tariffs-after-january-1-report.html

[11] https://www.cnn.com/2018/11/30/investing/premarket-stocks-trading/index.html

[12] http://fortune.com/2018/12/01/g20-statement-2018/

https://www.usatoday.com/story/opinion/2018/11/30/ukraine-conflict-trump-g-20-push-back-bully-putin-editorials-debates/2147851002/

[13] https://seekingalpha.com/article/4225786-u-s-good-gets

[14] https://www.marketwatch.com/story/consumer-confidence-falls-for-first-time-in-five-months-2018-11-27

[15] https://www.marketwatch.com/story/economy-grew-35-in-third-quarter-pushes-corporate-profits-to-6-year-high-gdp-shows-2018-11-28

[16] https://www.marketwatch.com/story/wages-may-show-strong-gain-in-november-jobs-report-and-wall-street-wont-like-it-2018-12-01

[17] https://www.webmd.com/chronic-fatigue-syndrome/default.htm