Market recap for the week ending 8/23/19

-Darren Leavitt, CFA

Investors were treated to another week of volatile markets as increased trade tensions between the US and China cast even more uncertainty on global growth.  Markets kicked off the week in pretty good form when Germany and China indicated that they would provide more stimulus to their ailing economies.  Moreover, In the US, the Trump administration promoted stimulus with the use of various tax cuts, although several plans seemed to flip flop and nothing concrete developed.  Additionally, consumer discretionary issues helped the early week advance with solid earnings results out of Target, Home Depot, and Lowes.  Investors also anxiously awaited the Fed’s end of the week annual Summit at Jackson Hole.   The event provided investors with several different Fed president’s thoughts on the current state of monetary policy and was highlighted with Chairman Powell’s speech on Friday.

Interestingly, the Fed Chairman’s statement was received as quite dovish while commentary from the Kansas City Fed President- George, Philadelphia Fed President- Harker, and Dallas Fed President Kaplan were quite hawkish.  On the economic front, the Markit Flash PMI data indicated a contraction for the first time since 2009, New Home Sales were less than expected and while the Leading Indicators figure was better than expected, 5 of the underlying sub indicators were flat or negative.  The S&P 500 lost -1.44% for the week while the Dow gave up -0.99%, the NASDAQ shed 1.83%, and the Russell 2000 tumbled -2.29%.  The yield curve had a couple of ventures into inversion mode during the week but managed to end flat on the week.  The 2-year note yield lost six basis points to close at 1.53%, and the 10-year bond yield lost one basis point to close at 1.54%.  The haven allure of gold continued put a bid into the precious metal.  Gold gained ~$30 on the week to close at 1538 an Oz.  WTI crude fell a fraction on the week to close at $54.16 a barrel.  There were no changes to our models last week.

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