Weekly Economic Summary - 10/15/2018Submitted by Miller Financial Group, LLC on October 15th, 2018
U.S. stocks are limping this morning after a dismal week last week which saw the Dow, S&P500 and Nasdaq fall -4.2%, -4.1% and -3.7% respectively.
Last week’s selloff was triggered by fears of rising interest rates. Rates have jumped suddenly with the closely tracked 10 year Treasury note hitting a 7 year high of 3.25% last week. Higher rates impact the behaviors of consumers and corporations alike as higher yields on fixed income typically draws capital away from riskier assets such as stocks.
Geopolitical tensions continue to be a source of risk avoidance for investors. The recent tension between the US and Saudi Arabia involves the disappearance and alleged murder of Washington Post journalist Jamal Khashoggi. President Trump threatened “severe punishment” for the Saudis if any connection was found between the kingdom and the missing journalist. This standoff could lead to sanctions for Saudi Arabia and higher oil prices for the rest of the world.
After last week’s rout, investors will be looking for potential market moving news this week as third quarter earnings season kicks off. Bank of America led the way Monday with a better than expected report.
News on the economic reporting front were mixed. The Empire State Manufacturing Survey for October was stronger than expected while the Retail Sales report for September was surprisingly weak.
Markets overseas are mixed as most Asian benchmarks finished Monday deeply in the red while European stocks were slightly higher. Gold and oil prices are trending higher while the dollar index is down to start the week.