Q3 2019 Quarterly Update

Weekly Commentary — October 7th, 2019

The Week on Wall Street

The fourth quarter started with a mixed week for equities. The Dow Jones Industrial Average lost 0.92% for the week; the S&P 500, 0.33%. In contrast, the Nasdaq Composite improved 0.54%. Overseas stocks pulled back: the MSCI EAFE index dipped 2.60%.[1],[2]

The Institute for Supply Management’s Manufacturing Purchasing Manager Index fell to 47.8 in September, its lowest level in ten years. Traders worried that the number reflected weakening business confidence. ISM’s latest Non-Manufacturing PMI also declined, but the 52.6 reading indicated growth in the service sector last month.[3],[4]

The Department of Labor said that employers added 136,000 net new workers in September. Unemployment was at 3.5%, a level last seen in December 1969. The U-6 jobless rate, which counts both the unemployed and underemployed, fell to a 19-year low of 6.9%. Monthly job creation has averaged 161,000 so far in 2019, down from 223,000 in 2018. This may reflect the challenge companies face trying to fill job openings in an economy with so little unemployment.[5]

The next earnings season is just ahead. Before it begins, let’s take a look back at the third quarter.

S&P 500 Ends Quarter Higher

In a statistical coincidence, the Dow Jones Industrial Average and S&P 500 gained the same percentage in the quarter: 1.19%. The Dow settled at 26,916.83 on September 30; the S&P, at 2,976.74. Both indices registered their third straight quarterly advance. The Nasdaq Composite went sideways for Q3, ending the quarter 0.09% lower at 7,999.34.[6],[7]

U.S.-China Trade Disagreement Continued

On August 1, the U.S. announced tariffs on an additional $300 billion of Chinese products – some would be effective September 1; others, effective by December 15. Four days later, China devalued its main currency, the yuan, to a level unseen in 11 years – a move that immediately sent U.S. stocks 3% lower. (Devaluing the yuan made Chinese goods cheaper for buyers paying for them in dollars, effectively offsetting the impact of U.S. tariffs.) As September concluded, however, word came that trade representatives from both nations would resume talks on October 10.[8],[9],[10]

The Fed Made a Move

The Federal Reserve lowered the country’s short-term interest rate by a quarter-point on September 18, to a range of 1.75% to 2.00%. Federal Reserve Chairman Jerome Powell, speaking to the media after the decision, called the outlook for the U.S. economy “favorable.” At the same time, he noted “a lot of uncertainty” surrounding the near-term economy and the Fed’s monetary policy views.[11]

What’s Next

Trade representatives from the U.S. and China return to the negotiating table on Thursday; their meeting is scheduled to conclude on Friday. Any news stemming from their talks could quickly affect equity markets, both here and abroad.

 

THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: Federal Reserve Chairman Jerome Powell speaks at the annual meeting of the National Association for Business Economics in Denver.

Wednesday: The Federal Reserve publishes the minutes from its September meeting.

Thursday: The Bureau of Labor Statistics presents the August Consumer Price Index, showing monthly and yearly inflation data.

Friday: The University of Michigan offers its preliminary October Consumer Sentiment Index, a measure of consumer confidence levels.

Source: Econoday, October 4, 2019

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: Domino’s (DPZ)

Thursday: Delta Air Lines (DAL)

Friday: Citigroup (C), Fastenal (FAST)

Source: Zacks, October 4, 2019

 

 

“Your competition isn’t other people. Your competition is your procrastination. Your ego. The unhealthy food you’re consuming. The knowledge you neglect. The negative behavior you’re nurturing and your lack of creativity. Compete against that.” 

– Jade Jackson

 

Tax Tips on Identity Theft

Unfortunately, getting your identity stolen and personal information compromised is all too common. Thieves steal other people’s identities for many reasons, including filing a fraudulent tax return (to claim the refund), committing credit card fraud, or trying to get a job. Here are a few things to know when protecting yourself against identity thieves:

  • The IRS will never contact you via email or phone to request personal information. If you receive a scam email claiming to be the IRS, report it tophishing@irs.gov.
  • People can steal your identity by stealing your wallet or purse, receiving information they need over the phone or email, finding your personal information in the trash, or accessing information you provide to an unsecured website (only ever enter credit card information on secure websites that start with “https://”).
  • Your identity may have been stolen if a letter from the IRS indicates that more than one tax return was filed for you.

Read more tips here.

* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov[12]

 

Share the Wealth of Knowledge!
Please share this market update with family, friends, or colleagues.

 

If you have any questions or would like to learn more about developing strategies to pursue a prosperous and safe future, contact me today at Derek.Merkler@Parsonex.com! You can also visit my website to learn about how I help our service members and veterans plan for and achieve financial independence.

My blog discusses a myriad of financial topics and challenges, book reviews, and commentary on current events in the financial world to benefit our military and veteran community.  I attempt to be as thorough as possible when examining each subject but can never account for every possible scenario.  Please remember to consult with your advisers for advice on your particular situation.  Thank you for reading!

Advisory Services offered through Parsonex Advisory Services, Inc. 8310 S. Valley Highway, Ste. 110, Englewood, CO 80112 (303) 662-8700.


[1]https://www.wsj.com/market-data

[2]https://quotes.wsj.com/index/XX/990300/historical-prices

[3]https://finance.yahoo.com/news/ism-manufacturing-101500823.html

[4]https://www.investing.com/news/economic-indicators/newsbreak-ism-services-index-tumbles-to-3year-low-1991459

[5]https://www.usatoday.com/story/money/2019/10/04/september-jobs-report-economy-added-135-000-145-000-were-forecast/3859017002/

[6]https://www.barrons.com/articles/the-dow-rose-97-points-because-we-still-want-to-invest-money-in-china-51569879471

[7]https://www.marketwatch.com/investing/index/comp/historical

[8]https://www.piie.com/blogs/trade-investment-policy-watch/trump-trade-war-china-date-guide

[9]https://www.bloomberg.com/news/articles/2019-08-04/asia-stocks-set-to-drop-with-trade-back-in-focus-markets-wrap

[10]https://www.cnbc.com/2019/09/30/us-stocks-investors-monitor-us-china-trade-impeachment-inquiry.html

[11]https://www.reuters.com/article/us-usa-fed/fed-cuts-rates-on-7-3-vote-gives-mixed-signals-on-next-move-idUSKBN1W32H7

[12]https://www.irs.gov/newsroom/top-tips-every-taxpayer-should-know-about-identity-theft

 

 

Leave a Reply