Market Perspective for December 31, 2018

Many foreign markets were closed for the New Year’s Day holiday. U.S. bond markets closed early, but the stock markets had a full trading day. The Dow Jones Industrial Average climbed 1.15 percent to lead the major indexes. For the year, the S&P 500 Index closed with a negative return of 6.24 percent. Healthcare was the best performing sector in 2018; SPDR Healthcare (XLV) rose 6.21 percent.

Economic reports will pick up this week with manufacturing PMIs and motor vehicle sales for December being releases. Economists forecast both numbers will cool from November’s pace, but remain near 12-month highs.

The consensus forecast says Friday’s employment report will show 185,000 new jobs in December and a lower unemployment rate of 3.6 percent. There were 155,000 jobs created in November.

The Commerce Department and its Bureau of Economic Analysis stopped reporting data during the government shutdown. If the shutdown ends, November construction spending is slated for release this week.

Crude oil rallied near $46 per barrel on Monday. Natural gas fell below $3 per mmBTU, down from $5 in mid-November.

 

The ETF Investor Guide for December 2018

The December Issue of the ETF Investor Guide AVAILABLE NOW! Links to the December Data Files have been posted below Market Perspective: Despite Volatility, Stick to Your Long-Term Plan The […]

Market Perspective for December 28, 2018

Equities staged a dramatic rally this week, as the Dow Jones Industrial Average gained more than 1000 points in one day. This was the largest point gain increase in the history of the index.

Shares dipped in the abbreviated Christmas Eve trading session and then bottomed on Wednesday. We expect long-term investors allocating 401k and IRA contributions should fuel buying into early January. In addition, pension funds have driven some of the equity buying as they reduce their bonds positions.

The Nasdaq and Russell 2000 achieved returns of 4.04 and 3.55 percent for the week, respectively. SPDR S&P 500 Index and Dow Jones Industrial Average each increased more than 2 percent.

All stock market sectors rallied this week. SPDR Consumer Discretionary (XLY), SPDR Technology (XLK), SPDR Financials (XLF) and SPDR Healthcare (XLV) led with gains of 4.48, 3.73, 3.51 and 3.11 percent, respectively.

SPDR Utilities (XLU) and SPDR Real Estate (XLRE) declined as traders rotated out of defensive positions amid the rebound. They slid 1.86 and 0.03 percent.

Economic data was light due to the Christmas holiday. Weekly jobless claims remain near four-decade lows. Consumer confidence as measured by the Conference Board slipped from a 136.4 reading in November to 128.1 in December. It is very likely falling stock prices impacted short-term sentiment. A reversal in sentiment is likely as holiday sales were the strongest in 6 years. Initial data indicates $850 billion in sales.

Crude oil rebounded this week, finishing at $45 per barrel. SPDR S&P Oil & Gas Production & Exploration (XOP) gained 9.33 percent over three days.

Treasury yields moved lower on the week as bonds rallied. The 10-year yield closed at its lowest level since April at 2.74 percent. The 30-year bond yield rose to 3.04 percent. iShares iBoxx High Yield Corporate Bond (HYG) advanced 1.03 percent this week as credit risk tumbled.