Trade News Moves the Market

Weekly Commentary — May 20th, 2019

The Week on Wall Street

Stocks fell sharply at the start of last week over trade tensions, then recovered with help from strong earnings and indications that U.S.-China trade talks would continue. Even so, the major indices had a down week. The S&P 500 lost 0.76%, while the Nasdaq Composite fell 1.27%, and the Dow Jones Industrial Average declined 0.69%.

In contrast, the MSCI EAFE benchmark for international stocks rose 0.19%.[i],[ii]Read More »

Higher Tariffs Take Effect

Weekly Commentary — 5/13/19

The Week on Wall Street

As we noted recently, Wall Street has a wandering eye. Last week, it focused on the new tariff threats in the ongoing U.S.-China trade dispute. Stocks fell across five trading sessions: the Dow Jones Industrial Average lost 2.12%, the S&P 500, 2.18%; the Nasdaq Composite, 3.03%. International stocks also fell: the MSCI EAFE index declined 3.06%.Read More »

Monthly Economic Update: May 2019

Transcript:

Hello, folks! This is Derek Merkler, fiduciary financial advisor back again with my May 2019 economic update.

April was another positive month for the markets. All 3 of the major domestic indices posted gains. The Dow Industrials added 2.6%, and the NASDAQ Composite was up 4.9%. Meanwhile, the S&P 500 increased by 3.9% –and wrapped up its best 4 months of performance in almost 9 years.[i] International stocks increased by 2.81% for the month.[ii]

So, what happened last month? Well, we received stronger economic data updates than many people anticipated –especially for economic growth and corporate earnings.

For example, the latest reading for Gross Domestic Product indicated that the economy grew by 3.2% in the 1stquarter. Economists predicted growth that was closer to 2.5%. Instead, the initial reading was the best 1st-quarter results since 2015 –and the 1sttime since then that growth exceeded 3% between January and March.[iii]

Corporate earnings have also been surprisingly strong, so far. When earnings season started, many investors were preparing to weather some choppy results. For months, experts discussed how the effect from 2018’s tax cuts would no longer help drive corporate profits. As a result, earnings would disappoint starting in the 1stquarter of 2019.

By the last full week of April, however, the initial earnings results were telling a different story. FactSet Research reported that almost half of the S&P 500 had shared their reports, and 77% beat their own earnings estimates. Of course, we still have many reports to receive so no one can say yet how this earnings season will end. As of April 26, FactSet was still projecting a year-over-year decline for corporate earnings. Credit Suisse, on the other hand, forecasted an increase of as much as 3%. Either way, the initial results seem to indicate that 1st-quarter corporate earnings are better than many people expected.[iv]

Stocks responded to these results by climbing even higher. In the last full week of April, both the S&P 500 and NASDAQ Composite reached new record highs. And all 3 major indexes have experienced double-digit gains for the year.[v]

The markets have come far since the decline we experienced late in 2018 and the doomsday predictions that those declines engendered. Don’t get me wrong.  I have no specific prediction regarding what may happen in markets over the next few months or years, nor do I expect unrealistic returns for any asset class.  Instead, I recognize that short-term market moves are often based more on emotion and behavioral biases than any changes in the underlying fundamentals.  As such, I find it important to emphasize those fundamentals and keep my clients focused on their plan rather than the extreme noise offered by the financial media.  As always, if you have questions, I’m happy to chat.

That’s it for this month’s economic update. See you next time!

 

Credits:

Thanks for watching!

Please visit my website at:

MilitaryFA.PXAdvisor.com

 

Remember, the topics discussed in this video are for informational purposes only and that past results do not guarantee future performance. If you would like to discuss your financial situation, please email me at Derek.Merkler@Parsonex.com.

 

Advisory services offered through Parsonex Advisory Services, Inc., 8310 S.Valley Hwy, Suite 110, Englewood, CO 80112. 303-662-8700.


[i]https://www.reuters.com/article/us-usa-stocks/sp-500-posts-best-four-month-run-in-nearly-nine-years-apple-jumps-after-hours-idUSKCN1S619O

[ii]https://www.msci.com/documents/10199/822e3d18-16fb-4d23-9295-11bc9e07b8ba

[iii]https://www.cnbc.com/2019/04/26/gdp-q1-2019-first-read.html

[iv]http://fortune.com/2019/05/01/investors-braced-for-an-earnings-recession-it-doesnt-look-like-its-happening/

[v]https://www.cnn.com/2019/04/28/investing/stocks-week-ahead-earnings-recession/index.html