Telemus Weekly Market Review

October 29 – November 2, 2018

The markets staged a comeback last week, with all the major indexes posting strong gains. Underpinning the rally was the expectation that the market was due for a rebound after October’s selloff, mostly upbeat earnings reports, and possible easing trade tensions with China. The S&P500 rose 2.42%, the blue chip Dow Jones Industrial Average gained 2.36%, the tech heavy Nasdaq gained 2.65%, and the small cap Russell 2000 index gained 4.32%.

Cyclical stocks were among the best-performing groups, with the materials sector and financials sector leading the advance. The consumer discretionary sector also had a notable gain. On the downside, utilities were the only group to settle in the red last week.

U.S.-China trade tensions eased last week, with U.S. President Trump saying that he had a “long and very good conversation” with China’s President Xi, adding that the two leaders will be getting together at the upcoming G-20 summit in Argentina. There were some conflicting reports as to whether Mr. Trump has asked his cabinet to begin drafting a trade deal, but the president did say he thinks a deal will eventually be reached.

On the earnings front last week, Facebook’s third quarter report was relatively well received, helping to ease investors concerns over its growth prospects. Apple, on the other hand, raised some red flags after forecasting softer than expected revenue guidance for the upcoming holiday quarter and announcing that it will no longer provide unit sales data for the iPhone, iPad, and Mac.

Other notable companies to report earnings last week included Pfizer, Coca-Cola, Chevron, Exxon Mobil, General Motors, eBay, DowDuPont, and Starbucks, all of which beat estimates. Conversely, results from General Electric, Spotify and Kellogg came in below consensus.

Highlighting last week’s batch of economic data was the Employment Situation report for October. Nonfarm payrolls increased by 250,000, higher than the consensus of 190,000, while average hourly earnings increased 0.2% as expected. The unemployment rate remained at a nearly 50-year low of 3.7%. The key takeaway from the report is that it is consistent with labor market trends that will keep the Federal Reserve on a tightening path. The U.S. Federal Reserve will be meeting next week, but no hike in interest rates is expected until December.

Overseas, European and Asian stocks rose with Wall Street last week. In Germany, Chancellor Angela Merkel announced that she won’t be seeking re-election as head of the CDU, following disappointing results for her party in a regional election. Her plan, however, is to remain Chancellor until 2021. Meanwhile, the Bank of England and the Bank of Japan released their latest policy decisions, keeping interest rates unchanged.

Interest rates in the U.S. jumped last week as strong economic and employment data pushed yields higher. The benchmark 10 year U.S. Treasury note closed at 3.214 on Friday, its highest level since early October.

Crude oil prices fell sharply last week, down over 7%, closing Friday at $62.86 a barrel despite looming Iran sanctions.

November 5 – November 9 Economic Calendar

  • Monday
  • John Williams Speaks
    8:30 AM ET
  • PMI Services Index
    9:45 AM ET
  • ISM Non-Mfg Index
    10:00 AM ET
  • TD Ameritrade IMX
    12:30 PM ET
  • Robert Kaplan Speaks
    7:00 PM ET
  • Wholesale Trade
    10:00 AM ET
  • Baker-Hughes Rig Count
    1:00 PM ET
  • Tuesday
  • Redbook
    8:55 AM ET

  • JOLTS
    10:00 AM ET
  • ISM Non-Mfg Index
    10:00 AM ET
  • TD Ameritrade IMX
    12:30 PM ET
  • Robert Kaplan Speaks
    7:00 PM ET
  • Wholesale Trade
    10:00 AM ET
  • Baker-Hughes Rig Count
    1:00 PM ET
  • Wednesday
  • FOMC Meeting Begins
  • MBA Mortgage Applications
    7:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Consumer Credit
    3:00 PM ET
  • Robert Kaplan Speaks
    7:00 PM ET
  • Wholesale Trade
    10:00 AM ET
  • Baker-Hughes Rig Count
    1:00 PM ET
  • Thursday
  • Jobless Claims
    8:30 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • FOMC Meeting Announcement
    2:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Wholesale Trade
    10:00 AM ET
  • Baker-Hughes Rig Count
    1:00 PM ET
  • Friday
  • PPI-FD
    8:30 AM ET

  • John Williams Speaks
    8:30 AM ET
  • Patrick Harker Speaks
    8:50 AM ET
  • Randal Quarles Speaks
    9:00 AM ET
  • Consumer Sentiment
    10:00 AM ET
  • Wholesale Trade
    10:00 AM ET
  • Baker-Hughes Rig Count
    1:00 PM ET

PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. This market commentary is a matter of opinion and is for informational purposes only.  It is not intended as investment advice and does not address or account for individual investor circumstances.  Investment decisions should always be made based on the client’s specific financial needs, goals and objectives, time horizon and risk tolerance.  The statements contained herein are based solely upon the opinions of Telemus Capital, LLC.  All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice. Information was obtained from third party sources, which we believe to be reliable, but not guaranteed.