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Market Bullets - Weekly Update

For the market week ended Friday, September 20, 2019

  • After flirting with all-time highs, the US Equity Markets dropped modestly last week, as a spike in oil prices following the attacks on Saudi oil facilities combined with questions around future Fed actions to impact markets. The S&P 500 dipped 0.5% for the week to bring its gains for the year to 19.4%. The Nasdaq declined 0.7% for the week and is now up 22.3% for the year, while the Russell 2000 (small-cap stocks) fell 1.2% for the week and is now up 15.7% for the year.
  • Global equity markets held up better than US markets last week, as US-China negotiators prepared for October trade talks, China lowered some key interest rates, and the Bank of Japan maintained its monetary stimulus activity. Developed Markets fell 0.2% for the week to bring its gains for the year to 12.1%. Emerging Markets dropped 0.5% for the week and are now up 5.8% for the year.
  • US interest rates declined notably last week, as the Fed lowered the Fed Funds rate by an expected 0.25% but suggested a higher bar for future rate cuts amid ongoing healthy US economic data. The yield on the US 10-Year Treasury declined to 1.72% from 1.90% the prior week on some concerns that uncertainty around future Fed rate cuts could hurt the US economy.

Of Interest to Us...

  • After an initial spike, oil prices were only up 6.5% last week despite attacks on Saudi oil facilities that shut down roughly 50% of their production, at least for the next couple of weeks. Unbeknownst to many, the US is now the world's largest oil producer thanks to fracking and other drilling-related technologies that have been developed over the past decade. Accordingly, the equity markets held up relatively well in the face of the attacks because the economic impact from such an event today is markedly less than it would have been a decade ago.