The U.S. markets finished out Q3 near the flatline amid some mixed news on the economic front, some attention to geopolitical events and an eye toward the drama in Washington. Treasury yields dipped but the U.S. dollar extended a recent run as of late, as Italian concerns and trade uneasiness lingered. Meanwhile, crude oil prices jumped and gold was higher. Headlines on the equity front surrounded some earnings reports, as well as SEC fraud charges files against Tesla’s CEO Elon Musk.
The Dow Jones Industrial Average (DJIA) rose 18 points (0.1%) to 26,458, the S&P 500 Index was nearly unchanged at 2,914, and the NASDAQ Composite inched 4 points (0.1%) higher to 8,046. In heavy volume,955 million shares were traded on the NYSE and 2.3 billion shares changed hands on the NASDAQ. WTI crude oil rose $1.13 to $73.25 per barrel and wholesale gasoline was up $0.02 at $2.09 per gallon. Elsewhere, the Bloomberg gold spot price gained $9.34 to $1,992.17 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.3% higher at 95.14. Markets were mixed for the week, as the DJIA fell 1.1%, the S&P 500 Index lost 0.5%, while the NASDAQ Composite increased 0.7%.
Personal income rose 0.3% month-over-month (m/m) in August, versus the Bloomberg forecast of a 0.4% gain, and matching July’s unrevised rise. Personal spending gained 0.3%, in line with estimates, but below July’s unrevised 0.4% gain. The August savings rate as a percentage of disposable income was 6.6%. The PCE Deflator was up 0.1% m/m, matching expectations and the prior month’s unrevised rise. Compared to last year, the deflator was 2.2% higher, in line with estimates, and versus July’s unrevised 2.3% increase. Excluding food and energy, the PCE Core Index was flat m/m, below expectations of a 0.1% rise and versus the prior month’s unrevised 0.2% gain. The index was 2.0% higher y/y, matching estimates and July’s unrevised rise.
The final September University of Michigan Consumer Sentiment Index was adjusted slightly lower to 100.1, from the preliminary 100.8 figure, and versus forecasts of 100.6. However, the index was above August’s 96.2 level and remained at a 6-month high. The downward revision came as both the expectations and current conditions components of the survey were adjusted lower, but both were up solidly versus August’s figures. The 1-year inflation forecast declined m/m to 2.7% from August’s 3.0% and the 5-10 year outlook dipped to 2.5% from 2.6%.
The Chicago Purchasing Managers Index declined to 60.4 in September, from 63.6 in August, and versus expectations of 62.0, though a reading above 50 denotes expansion.
U.S. stocks posted a strong Q3 advance with trade uncertainty remaining a source of market skittishness as further tariffs between the U.S. and China went into effect and the latter reportedly declined a next round of talks. Enduring drama in Washington was also met with a persisting U.K. Brexit standoff, but Italy’s fiscal turmoil appeared to take top billing on the global political front to unnerve the markets. The Fed hiked rates for a third time this year as widely expected, but kept alive the possibility of another increase this year and suggested three more moves next year after upgrading the economic outlook. The solid economic backdrop was on display this week, as Q2 GDP growth was unrevised at a 4.2% quarter-over-quarter annualized rate, new home sales rose more than expected and Consumer Confidence jumped to an 18-year high. Treasury yields were mixed-to-little-changed as the markets grappled with the Fed decision and exacerbated global uneasiness, while the U.S. dollar rebounded from last week’s drop.
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