Equities started the month off on a soft note with the S&P 500 falling 1.3% over the past week. Domestic small caps were down a similar number while foreign developed equities fared better with a 0.9% decline. Despite the equity drop, fixed income didn’t provide any offset as the Bloomberg Barclays Aggregate Bond Index was flat on the week.
Equities continued to bleed higher and tacked on another 1% for most large cap indices. Domestic small caps popped 2.1%. The headlines seem to attribute daily equity gains to U.S.- China comments ad nauseum, but the driving force is participants forced to buy back into a rising market. Both retail and hedge fund risk positioning have been extremely defensive despite the strong gains realized year-to-date, and over the last decade.
Equities moved higher this week as the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all notched new record highs. Small caps equities lagged. Bond yields fell causing the Barclays Aggregate Bond Index to outpace the S&P 500 on the week. Rhetoric regarding the China-U.S. trade deal is not looking good.
We’ve approached the end of yet another earnings season. Currently, 92% of S&P 500 companies have reported earnings and sales for the third quarter. This season’s report shows financial results for U.S. companies are better than earlier expected. According to Refinitiv, of the companies reporting, earnings have contracted by 0.4%, which is 4.5% better than expected.
Equities moved higher this week as the S&P 500, Dow Jones Industrial Average and Nasdaq Composite all notched new record highs. The Dow Jones Transportation Average still has more than 5% to go to hit a high and offer solid confirmation that the near two-year consolidation in equity markets is ready for the next sizeable advance.
The economy is still growing. It looks like we can push recession fears back at least another two quarters. That is, if you define recession as a fall in GDP over two successive quarters. GDP growth in the third quarter came in at 1.9%. Some market participants were disappointed with this number, despite it being better than the expected 1.7%.
Equities moved higher this week as earnings take center stage. The S&P 500 advanced 0.5% and outpaced flat returns on the Bloomberg Barclays Aggregate Bond Index. The dollar has been soft as of late, which is giving a tailwind to higher beta assets and foreign equities. Foreign developed gained 0.9% on the week and emerging markets pushed up 0.7%.
This week has given us positive moves in equity markets. The S&P 500 is up 1.77%. This strong move comes as we see a slight sliver of light in the tunnel that is the Sino-American trade negotiations. Talks seem to be moving in the right direction as we passed the October 15 deadline with no tariff increase.
Equities bounced back this week with domestic large caps outperforming small caps. The S&P 500 was up 1.2%, whereas small caps were flat. Bond yields inched higher resulting in little change in the Bloomberg Barclays Aggregate Bond Index. Emerging market and foreign developed equities underperformed in the United States.
Equities rallied sharply on Friday following a decent monthly jobs report where 136,000 net adds were reported.
The markets are not a fan of the global manufacturing numbers coming out. This week’s returns may indicate equity markets actively don’t like the manufacturing numbers. The S&P 500 was down 2.5% for the week as of yesterday. This is the lowest weekly level since the beginning of August.
We are seeing the impact of the trade conflict on global manufacturing.