In this week’s recap: oil prices spike, following drone
attacks in the Middle East; the Federal Reserve cuts interest rates, and a
Chinese trade delegation decides to head home early from America.
Weekly Economic Update
THE WEEK
ON WALL STREET
Investors
reacted to two major news items last week, one far more of a surprise than the
other. The Federal Reserve did indeed make a rate cut, matching Wall Street
expectations. Drone strikes on two of the world’s largest oil fields brought a
shock to the global oil market.
At
Friday’s closing bell, stocks wound up with weekly losses after news broke that
Chinese trade officials were heading home from the U.S. sooner than planned.
The S&P 500 retreated 0.51% week-over-week; the Dow Jones Industrial
Average lost 1.05%, and the Nasdaq Composite dipped 0.72%. In developed foreign
markets, shares tracked by the MSCI EAFE index fell 0.31%.1,2,3
Another
Quarter-Point Cut
Wednesday,
the Federal Open Market Committee voted 7-3 to lower the benchmark interest
rate by another 0.25%, to a range of 1.75% to 2.00%.
While
traders looked for signs of future guidance on monetary policy, little emerged
from the latest Fed policy statement and Fed chair Jerome Powell’s subsequent
press conference. The updated dot-plot forecast showed that seven Fed officials
anticipated at least one more cut before 2020, while ten did not.4
Oil
Prices Jump
As
last week began, crude oil futures spiked in response to an attack that
interrupted roughly 5% of the world’s oil production. The value of West Texas
Intermediate crude, the U.S. benchmark, settled at $62.90, up $8.05 or 14.7% by
Monday’s close.
This
was oil’s biggest one-day leap since September 2008. Prices came down from
there: Friday, WTI crude settled at $58.48.5,6
FINAL THOUGHT
So,
what day last week saw the biggest loss or gain for stocks? Not Monday, when
the market absorbed news of the Saudi oil field strike. Not Wednesday, when the
Fed rate cut occurred. Instead, it was Friday, when the S&P 500 lost only
0.49%. It just goes to show that stocks may ride through seemingly
market-moving events with little daily change.7
T I P O F
T H E W E E K
If you are 50 or older, remember that you can take advantage of catch-up contributions in your retirement accounts. Under the current catch-up rules, set by the Internal Revenue Service, you can contribute an extra $1,000 to a Roth or traditional IRA and an extra $6,000 to the typical workplace retirement plan.
THE WEEK
AHEAD: KEY ECONOMIC DATA
Tuesday: The Conference Board’s
September Consumer Confidence Survey.
Wednesday: August new home sales
data from the Census Bureau.
Thursday: The federal government’s
third estimate of second-quarter economic growth.
Friday: August personal spending
numbers from the Bureau of Economic Analysis, and September’s final University
of Michigan Consumer Sentiment Index, measuring consumer confidence levels.
Source:
Econoday, September 20, 2019
The Econoday economic calendar lists upcoming U.S. economic data
releases (including key economic indicators), Federal Reserve policy meetings,
and speaking engagements of Federal Reserve officials. The content is developed
from sources believed to be providing accurate information. The forecasts or
forward-looking statements are based on assumptions and may not materialize.
The forecasts also are subject to revision.
THE WEEK
AHEAD: COMPANIES REPORTING EARNINGS
Tuesday:
AutoZone
(AZO), Cintas (CTAS), Nike (NKE)
Thursday: Accenture (ACN),
Carnival (CCL), Micron Technology (MU)
Source:
Zacks, September 20, 2019
Companies
mentioned are for informational purposes only. It should not be considered a
solicitation for the purchase or sale of the securities. Any investment should
be consistent with your objectives, time frame, and risk tolerance. The return
and principal value of investments will fluctuate as market conditions change.
When sold, investments may be worth more or less than their original cost.
Companies may reschedule when they report earnings without notice.
Q U O T E O F T H E W E E K
“The strongest natures,
when they are influenced, submit the most unreservedly; it is perhaps a sign
of their strength.”
VIRGINIA WOOLF
T H E W E E K L Y
R I D D L E
Up and down the stairs
it goes, without moving any toes. It is found upstairs, downstairs,
even in the hall; alas, it cannot move at all. What is it?
LAST WEEK’S
RIDDLE: What has hundreds or thousands of ears, but can’t hear a thing?
ANSWER: A corn
field, as it is full of ears of corn.
Troy L Thompson CFP may be
reached at 515-432-5421 or troy@thompsonfinancialinc.com
www.thompsonfinancialinc.com
www.thompsonfinancialinc.com
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Troy
Troy Thompson, CFP
DBA Thompson Financial and Hanson Asset Strategies
Securities offered through FIRST HEARTLAND CAPITAL, INC.
Member FINRA & SIPC.
Thompson Financial is not affiliated with FIRST HEARTLAND
CAPITAL, INC.
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2 - wsj.com/market-data [9/20/19]
3 - quotes.wsj.com/index/XX/990300/historical-prices
[9/20/19]
4 - reuters.com/article/us-usa-fed/fed-cuts-rates-on-7-3-vote-gives-mixed-signals-on-next-move-idUSKBN1W32H7
[9/18/19]
5 - marketwatch.com/story/us-oils-10-surge-after-saudi-attack-puts-it-on-track-for-the-biggest-daily-gain-in-312-years-2019-09-15
[9/16/19]
6 - money.cnn.com/data/commodities/index.html [9/20/19]
7 - money.cnn.com/data/markets/sandp/ [9/20/19]
CHART CITATIONS:
quotes.wsj.com/index/SPX/historical-prices
[9/20/19]
treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield
[9/20/19]
