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Market Bullets - Weekly Update

For the market week ended Friday, October 4, 2019

  • US Equity Markets had a volatile week amid economic reports that stoked growth concerns, but the markets bounced back to finish the week with relatively modest declines. The S&P 500 only slipped 0.3% for the week after being down over 4% at one point during the week, bringing its gains for the year to 17.8%. The Nasdaq actually rose 0.5% for the week and is now up 20.3% for the year, while the Russell 2000 (small-cap stocks) under-performed given its disproportionate weighting to the US economy, down 1.3% for the week to lower its gains for the year to 11.3%.
  • Global equity markets were hit last week as well, as political concerns escalated in Hong Kong amid early signs of a possible crackdown while economic data out of Europe remains weak. Developed Markets declined 2.2% for the week to bring its gains for the year down to 8.6%. Emerging Markets dipped 0.5% for the week and are now up 3.2% for the year.
  • Weak US economic data pushed interest rates lower last week as concerns about slowing economic growth increased investor expectations that the Fed would likely continue to lower interest rates. The yield on the US 10-Year Treasury fell to 1.53% from 1.68% the prior week. The Street currently places a roughly 65% chance that the Fed will lower the Fed Funds rate by 0.25% at its next meeting later this month.

Of Interest to Us...

  • The ISM Manufacturing Index, a key measure of US manufacturing activity, dropped further into "contractionary" territory for September, falling to 47.8% from 49.1% in August. Note that a measure below 50.0% suggests contraction and above 50.0% suggests expansion for the manufacturing sector. This was the worst reading since June 2009. In addition, the ISM Services Index for September declined to 52.6% from 56.4%, well below expectations. The combination of the two reports suggest that the growth rate of the US economy is indeed starting to slow.
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