- On August 15, 2019
- commentary, Economy, investment, Investments, investors, market, Markets
Cornerstone’s Week on Wall Street
Highlights for the week:
- • Market volatility continued last week as stocks ended the week down
- • Over the past 18 months, we’ve seen increased volatility without real upside progress in U.S. stocks
- • A sustained upside breakout to new highs will be challenging moving forward
Stocks fell last week as trade headlines dominated the investing landscape. The S&P 500 index fell over 3% on Monday, before recouping most of the losses to end the week down 0.4%. Stocks outside the U.S. fared worse, as International developed market stocks were down 1.7% and Emerging Markets down 1.6%. Defensive sectors, REITs and utilities showed positive returns, while Energy and Financials were hardest hit. Bond yields continued lower and in a somewhat troubling sign, global debt with a negative yield eclipsed $15 trillion.
For all the ups and downs and volatility that investors have experienced recently when widening out the time horizon, we can see that stocks have really gone nowhere since the January 2018 high. It is said that equity market bottoms are events, while tops are a process. We’re not ready to call a top in the market for 2019 as anything can happen, but acknowledge that the probability for a significant upside breakout is falling as time passes.
Most other broad-based U.S. and global stock indexes are lower during the same period, which does not confirm underlying strength. With the economic data continuing to weaken, bond yields falling precipitously, and a ramping up of trade tensions it will be very challenging for equity markets to break out. While these issues provide support for further Fed easing in the coming months, we would caution investors who are banking on the Fed to save the day. The chart below from Morgan Stanley illustrates what happened the last two times the Fed paused and then went on to cut rates. Spoiler alert: it coincided with equity bear markets and the last two recessions. We continue to implement our barbell strategy for our investors and remain in high-quality assets, with some dry powder available. It is critically important to be nimble and highly selective as we look to capitalize on continued volatility.
As we enter the dog days of summer data releases will slow a bit. Earnings season starts to head down the home stretch and investors will see a significant drop in releases going forward. Notable names reporting this week include: CISCO (CSCO), Wal-Mart (WMT), NVIDIA (NVDA), Deere (DE), and Alibaba (BABA). The economic calendar is also relatively light this week with inflation data via the Consumer Price Index (CPI) released on Tuesday, along with some housing data toward the end of the week.
Listed market indices are provided for information purposes only and are not intended in any way to be representative of Cornerstone Wealth Group’s client accounts or performance. The holdings and performance of Cornerstone Wealth Group’s client accounts may differ substantially from the listed indices. Market indices are unmanaged and are not available for direct investment.
This material provided by Cornerstone Wealth Group is for informational purposes only. It is not intended to serve as personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment. Any securities mentioned herein are not to be taken as advice or
recommendation to buy or sell a specific security. The information provided may not be applicable to your account managed by Cornerstone Wealth Group. Please contact Cornerstone Wealth Group for specific information regarding the holdings and trading activity of your account. Opinions expressed in this commentary do not represent a personalized recommendation of a particular investment strategy to you. Additionally, you should review and consider any recent market news. All expressions of opinion are subject to change without notice in reaction to shifting market or other conditions. Data provided is believed to be accurate, but its accuracy, completeness or reliability cannot be guaranteed.
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