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Market Bullets - Weekly Update

For the market week ended Friday, September 28, 2018

  • US equity markets paused last week, though the just-completed third quarter showed strong gains.  Trade remains the near-term driver of the markets, as last week’s declines came due to China cancelling mid-level trade talks with the US in response to recent tariffs, while the US and Canada failed to reach a trade agreement by their self-imposed September 28th deadline.  The S&P 500 dropped 0.5% for the week, though gains for Q3 were up 7.2% and year-to-date gains sit at 9.0%.  The Nasdaq actually increased 0.7% for the week and remains the best-performing major index for the year, up 16.6%.  The Russell 2000 (small-cap stocks) fell 1.1% for the week and is now up 10.5% for the year.  
  • Fresh concerns about Italian debt levels combined with the trade news to hit global markets last week.  Developed markets fell 1.1% for the week, with the concerns out of Italy causing European stocks to drop over 2.3%.  For the year, Developed Markets have declined 3.8%.  Emerging Markets decreased 0.3% for the week, helped by Chinese equities bouncing back from their notable decline the prior week.  For the year, Emerging Markets have fallen 9.5%.         
  • Oil prices rose sharply last week, up 4.0%, as supply concerns gripped the market amid OPEC failing to agree to production increases over the weekend.  Global demand for energy remains healthy thanks to a relatively strong global economy.  Oil prices have increased 22.4% for the year and now sit at roughly 4-year highs.   

Of Interest to Us...

  • Oil prices are up over 22% for the year, yet Energy stocks are up less than 5.0%.  Is the lack of performance of Energy stocks a sign that the market thinks the rise in oil prices this year is not sustainable, or are Energy stocks poised to rally by yearend?