This Week’s…. 7 Things to Know About the Markets & the Economy (Quarter Closes with Big Equity Gains, The Fed Lifts Rates, Oil Surges, Consumer Confidence At 19 Year High, October Initiates A Year End Rally?)
- Market Stats: As the third quarter drew to a close, major US Indexes posted modest losses for the week though they have performed quite well over the month and quarter. Over the past three months, the S&P has risen more than 7%, its biggest quarterly advance since the fourth quarter of 2013. The Dow is up about 9%. Both the Dow and the S&P have risen in 11 of the past 12 quarters. The Nasdaq is up more than 7% for the quarter, and it is set for its ninth straight quarterly gain. Japanese stocks are on the verge of hitting their highest levels since 1991. The Nikkei has gained 17% in six months, exceeding all other major stock markets.
- Chart of the Week: October is one of the more misunderstood months for the stock market. The month is best known for some large declines, like 1929, 1987 and 2008. In reality, is it isn’t that bad overall, though volatility can be high. The seasonally weak months of August and September have often opened the door for a bullish fourth quarter.
- America Alone: President Donald Trump pushed his “America First” agenda at this week’s United Nations General Assembly, and earned rebukes from . During a e that lasted just over an hour, Trump indicated that his personal friendship with President Xi Jinping of China may be over, openly rejected a meeting with Canada’s Prime Minister Justin Trudeau and restated his grievances over Iran. He said that “the United States is .’’
- Trade Twist: Wednesday, President Trump accused Beijing, of trying to interfere in the U.S. midterm elections and of attempting to damage him politically. China is taking the fight over trade directly to the US heartland, paying for an advertising supplement in Iowa’s largest newspaper to highlight what it calls “the fruit of a president’s folly.” This new twist comes as the trade dispute grows more heated with the imposition of a 25% tariff on more than $200 million of Chinese imports to the U.S. While investors have repeatedly shrugged off the trade issue, focusing instead of strong economic data and corporate earnings, any additional developments on this front could dictate short-term market direction.
- Oil Surge: A barrel of Brent crude traded over $83 this week, the highest level since November 2014, after OPEC and its partners signaled less urgency to boost output at a meeting in Algiers. The move comes despite a call from Trump to increase supply in order to cap rising oil prices. Major energy trading houses are predicting OPEC will continue to hold the upper hand with forecasts for $100 crude becoming more common. Speculation is mounting, meanwhile, that Donald Trump may authorize a release from the Strategic Petroleum Reserve in order to cool prices.
- The Federal Reserve lifted short-term interest rates by a quarter percentage point, a move that will push up costs for everything from credit cards to adjustable-rate mortgages. The increase sets the target for the benchmark federal-funds rate in a range of 2% to 2.25%. It's also the eighth move higher since 2015, and the third this year. Central bank officials also indicated that another increase would be forthcoming before year-end. The yield on ten year US Treasury bond hit a 19 week high and traders nervously watched for a possible upside breakout.
- Economy: Consumer confidence hit an 18-year high in September, a positive indicator for spending going into the holiday shopping season, as robust job growth and a strong economic outlook bolstered Americans’ expectations for the future. For consumers, trade concerns are not registering. Gross Domestic Product (GDP) a broad measure of the goods and services produced across the U.S., rose at a 4.2% seasonally and inflation-adjusted annual rate in the second quarter. Global trade added 1.22 percentage points to the quarter’s GDP growth rate, compared with an earlier estimate of 1.17 percentage points.
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