Equippingyou as an Informed Investor

Weekly Market Snapshot

October 19, 2018

Market Commentary
by Scott J. Brown, Ph.D., Chief Economist

Next week, the advance estimate of third quarter GDP growth is expected to be strong, although there is some uncertainty about contributions from inventories and foreign trade. In 2Q18, slower inventories subtracted from headline GDP growth, while net exports (a narrower trade deficit) added. These two components appear likely to reverse in 3Q18 (faster inventory growth to add to GDP growth, a wider trade deficit to subtract). Consumer spending growth is expected to have remained strong. Factory shipments data point to a robust gain in business fixed investment.


Indices

  Last Last Week YTD return %
DJIA 25379.45 25052.83 2.67%
NASDAQ 7485.14 7329.06 8.43%
S&P 500 2768.78 2728.37 3.56%
MSCI EAFE 1852.35 1851.21 -9.68%
Russell 2000 1560.75 1545.38 1.64%

Consumer Money Rates

  Last 1 year ago
Prime Rate 5.25 4.25
Fed Funds 2.17 1.17
30-year mortgage 4.97 3.96

Currencies

  Last 1 year ago
Dollars per British Pound 1.302 1.316
Dollars per Euro 1.145 1.185
Japanese Yen per Dollar 112.21 112.54
Canadian Dollars per Dollar 1.307 1.249
Mexican Peso per Dollar 19.155 18.805

Commodities

  Last 1 year ago
Crude Oil 68.65 51.29
Gold 1230.10 1290.00

Bond Rates

  Last 1 month ago
2-year treasury 2.87 2.81
10-year treasury 3.17 3.06
10-year municipal (TEY) 4.25 4.05

Treasury Yield Curve – 10/19/2018

Chart

As of close of business 10/18/2018


S&P Sector Performance (YTD) – 10/19/2018


Chart

As of close of business 10/18/2018


Economic Calendar

October 24  —  Existing Home Sales (September)
 —  Fed Beige Book
October 25  —  Jobless Claims (week ending October 20)
 —  Durable Goods Orders (September)
 —  Advance Economic Indicators (September)
October 26  —  Real GDP (3Q18, advance estimate)
 —  UM Consumer Sentiment (October)
October 29  —  Personal Income and Spending (October)
October 30  —  CB Consumer Confidence (October)
October 31  —  Employment Cost Index (3Q18)
November 1  —  ISM Manufacturing Index (October)
November 2  —  Employment Report (October)
November 6  —  Election Day
November 8  —  FOMC Policy Decision (no press conference)
December 19  —  FOMC Policy Decision (no press conference)

 

All expressions of opinion reflect the judgment of the Research Department of Raymond James & Associates, Inc. and are subject to change. There is no assurance any of the forecasts mentioned will occur or that any trends mentioned will continue in the future. Investing involves risks including the possible loss of capital. Past performance is not a guarantee of future results. International investing is subject to additional risks such as currency fluctuations, different financial accounting standards by country, and possible political and economic risks, which may be greater in emerging markets. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, and state or local taxes. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Municipal bonds may be subject to capital gains taxes if sold or redeemed at a profit. Taxable Equivalent Yield (TEY) assumes a 35% tax rate.

The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 index is an unmanaged index of small cap securities which generally involve greater risks. An investment cannot be made directly in these indexes. The performance noted does not include fees or charges, which would reduce an investor's returns. U.S. government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the U.S. government.

Commodities trading is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Specific sector investing can be subject to different and greater risks than more diversified investments. Gross Domestic Product (GDP) is the annual total market value of all final goods and services produced domestically by the U.S. The federal funds rate (“Fed Funds”) is the interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight. The prime rate is the underlying index for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. Material prepared by Raymond James for use by financial advisors. Data source: Bloomberg, as of close of business October 18, 2018.

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