Market Perspective for November 23, 2018

The stock market declined on the week with the S&P 500 losing 3.8 percent, the Dow Jones Industrial average 4.4 percent and the Nasdaq 4.3 percent. The Russell 2000 Index was the best performer among major indexes, declining only 2.48 percent.

Technology was again a laggard with SPDR Technology (XLK) slumping 6.05 percent.  Health care and consumer staples lost considerably less.  SPDR Health Care (XLV) declined 2.61 percent and SPDR Consumer Staples (XLP) 2.30 percent.

Housing starts and existing home sales increased from September’s growth pace. However, the homebuilder confidence index slipped from 68 to 60 in November as rising interest rates begin curbing customer interest in new homes.

Consumer sentiment shows a bifurcation between higher and lower income Americans. Falling stock prices lowered sentiment among wealthier households, but rising wages increased sentiment among the bottom third of wage earners. Weekly jobless claims for the week ending November 17 rose to 224,000. Claims remain near the lows of the year.

Crude oil tumbled to a new 52-week low on Friday. West Texas Intermediate traded with a $50 handle on Friday. Russia said it doesn’t see the need for production cuts yet. Investors are also turning their eye to U.S. production. Texas’ Permian Basin has thousands of wells that can produce profitably at $30 per barrel. New pipelines will break shipping bottlenecks in the coming year. Natural gas stabilized in the mid-$4 range as volatility collapsed.  SPDR Energy (XLE) declined 4.87 percent this week. Although lower oil prices weighed on the sector, the benefit will be consumers saving at the pump. Wholesale gasoline fell 11 cents on Friday alone.

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