Market Perspective for August 9, 2019

The S&P 500 Index slipped 0.47 percent on the week.  Still, several our preferred funds provided solid returns.  SPDR Healthcare (XLV), SPDR Consumer Discretionary (XLY) and SPDR Consumer Staples (XLP) increased 0.42 percent, 0.14 percent and 0.12 percent, respectively.

Utilities and real estate also rewarded investors. SPDR Real Estate (XLRE) advanced 1.80 percent and SPDR Utilities (XLU) 1.15 percent. Most of the gains came courtesy of lower bond yields. iShares 20+ Year Treasury (TLT) advanced 2.64 percent.

Low volatility and high-quality dividend funds outperformed for yet another week. iShares Edge MSCI Minimum Volatility USA (USMV) advanced 1.07 percent this week. Vanguard Dividend Appreciation (VIG) climbed 0.55 percent. Since May 1 of this year, USMV has risen 5.85 percent and VIG 3.27 percent, while SPDR S&P 500 (SPY) has slipped 0.34 percent.

This week’s dip in stocks was mainly due to the People’s Bank of China allowing the yuan to slide past the 7.00 level. The Chinese yuan fell 1.60 percent for the week. The last time China made a significant currency move was in August 2015, when its economy was slowing. Escalating protests in Hong Kong heightened the market’s awareness of China risks. iShares China Large Cap (FXI) fell 2.79 percent on the week, iShares MSCI Hong Kong (EWH) 3.53 percent and iShares MSCI Emerging Markets (EEM) 1.68 percent.

Economic data was light this week. The services PMIs showed the economy is still in a healthy expansion. The Job Openings and Labor Turnover Survey (JOLTS) showed 7.3 million openings, more than the number of unemployed Americans. Weekly jobless claims fell to 209,000, below estimates. Producer price inflation was 0.2 percent in July, higher than the 0.1 percent forecast.

Crude oil slumped at much as 8.5 percent this week before closing with a loss of 1.6 percent. Crude oil closed at $52.54 per barrel, down from a high of $56 at the start of the week. Natural gas rebounded after making a new three-year low near $2 per mmBTU.

Earnings season remains positive for stocks. Shares of Roku (ROKU) have gained nearly 250 percent on the year following strong earnings. CVS Health (CVS), Booking Holdings (BKNG) and Novo Nordisk (NVO) advanced 6.45 percent, 3.91 percent and 3.18 percent thanks in part to their earnings reports. Disney (DIS) missed estimates and shares dipped 2.25 percent for the week.

 

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