Markets posted gains last week after struggling for the month of October.
What drove market performance last week?
We received a fair amount of data and reports, with the following details holding particular weight for investors:
• U.S.–China trade updates were inconsistent.
Stocks fluctuated widely on Friday, in large part because of contradictory updates on a potential trade deal between the U.S. and China. President Trump said the two countries are a lot closer to an agreement. Larry Kudlow, Trump’s economic advisor, shared a different perspective, indicating the U.S. is not working out a trade deal with China. These conflicting reports contributed to volatility in the markets as investors tried to determine exactly where we stand.
• U.S. corporate earnings were strong but imperfect.
So far, the 3rd quarter earnings season has been a strong one. Of the 74% of S&P 500 companies that have released their data, 78% have beaten their earnings-per-share estimates, and earnings have grown 24.9% year-over-year. However, concerns for at least one major tech company’s projections affected investor behavior. In addition, analysts predict that in 2019, earnings growth will not match the double-digit results we’ve experienced this year.
• Labor market growth beat expectations.
The economy added 250,000 jobs in October, a stronger increase than expected. Wages also rose, posting 3.1% growth over the prior year, the fastest annual growth since 2009. Investors interpreted these results to mean that the Federal Reserve would continue raising interest rates at its projected pace.
Where should you go from here?
If you felt at all whipsawed by last week’s price fluctuations, especially after October’s declines, you weren’t alone. Even if you know that market volatility is normal, it can feel intense in the moment. Right now, many investors are also jumping in and out of popular, crowded stocks, causing market levels to shift more quickly than many people are used to. To navigate these accelerated changes, you have to remove emotion from investing decisions and stick to your long-term vision even more.
Rather than trying to predict what stocks will do in the immediate future, we are here to help you plan for the financial life and legacy you desire. Please let us know if you have any questions about where you are and how to pursue your future.
While there are a few economic updates this week the only event that will really drive the market in the short-term is the mid-term election taking place Tuesday. I, for one, cannot wait for election day to come and go. It seems the discord among parties has become more galvanized than ever. The best thing that could happen would be to remove the term Republican or Democrat from the jerseys and remind everyone they are playing for the same team. Wouldn’t that be a novel idea?
This day in history:
On this day in 1994, George Foreman, age 45, becomes boxing’s oldest heavyweight champion when he defeats 26-year-old Michael Moorer in the 10th round of their WBA fight in Las Vegas. More than 12,000 spectators at the MGM Grand Hotel watched Foreman dethrone Moorer, who went into the fight with a 35-0 record. Foreman dedicated his upset win to “all my buddies in the nursing home and all the guys in jail.”
Quote of the week:
“Time well spent results in more money to spend, more money to save,
and more time to vacation.”
— Zig Ziglar
PUBLISHED BY NICK TOADVINE