The benchmark indexes suffered another sharp decline last week. All major indexes lost value, led by the Global Dow. The S&P 500 and the Nasdaq would be nearing a correction (down more than 10% from recent peaks) following last week’s drop. Equally noteworthy is the fact that all of the year-to-date gains have essentially dissipated, with only the Nasdaq still ahead of last year’s closing value. Quarterly earnings season reached its busiest time, offering a mixed bag with some major corporations posting healthy gains, while other companies reported a slowdown in revenue. Business investment has waned, while oil prices pulled energy stocks down.
LAST WEEK’S ECONOMIC HEADLINES
- The advance estimate of the third-quarter gross domestic product showed the economy grew at a 3.5% annual rate. Consumer spending was a major driver of the overall growth in the third quarter, jumping 4.0%, after increasing 3.8% in the second quarter.
- The housing sector in September dipped 5.5% below their August rate. The pace of sales lagged despite more new homes on the market, as inventory increased.
- Led by a 1.9% jump in transportation, new orders for manufactured durable goods rose in September, following a healthy jump in August. On the flip side there was a 2.4% drop in capital goods orders.
- The international trade deficit was $76.0 billion in September, up $0.6 billion from $75.5 billion in August.
EYE ON THE WEEK AHEAD
The employment figures for October are out this week. A good report is usually enough to move the market in a positive direction, at least temporarily.
As mentioned in the BWFA President’s letter sent last week via email, we continue to stay disciplined and long term in our approach to managing your portfolio, while monitoring in the short term to make informed ongoing decisions for your investments. We certainly want to refrain from overreacting to the sensationalizing and hyperbolizing from the media. Thank you.