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They can pass through state after state, all while never moving. What are they?
LAST WEEK’S RIDDLE: What can be broken, but should not be forgotten?
ANSWER: A promise.
In this week’s recap: stocks slump as the 10-year Treasury yield spikes, an ISM index hits a historic peak, job creation weakens, and oil extends its winning streak.
10-YEAR TREASURY YIELD HITS A 7-YEAR PEAK
Friday, the yield on the 10-year note reached 3.23%, its highest level since 2011. Its yield rose dramatically last week, influenced by hawkish comments from Federal Reserve chair Jerome Powell and reports showing minimal unemployment and a swiftly expanding business sector. All this strengthened investor perception that the U.S. economy has hit its stride. It also suggested a near future with recurring interest rate hikes, costlier borrowing, and subdued spending. That possibility weighed on equities. For the week, the Nasdaq Composite fell 3.21% to 7,788.45, and the S&P 500, 0.97% to 2,885.57; the Dow Industrials retreated just 0.04% to 26,447.05.1,2
LESS HIRING IN SEPTEMBER
A look at the Department of Labor’s latest jobs report reveals good news and bad news. The good news? Unemployment declined further to 3.7%, annualized wage growth improved to 3.4% in the third quarter, and monthly net hiring averaged 190,000 in Q3. The bad news? Payrolls expanded with just 134,000 net new jobs last month, as underemployment ticked up 0.1% to 7.5% and year-over-year wage growth slowed to 2.8%. Some economists feel that Hurricane Florence significantly impacted the September data.3
SERVICE SECTOR EXPANDS AT A HISTORIC PACE
The Institute for Supply Management said its non-manufacturing purchasing manager index rose 3.1 points in September to 61.6. It has never been that high in its decade-long history. ISM’s PMI for the factory sector took a slight dip in September, slipping from 61.3 to 59.8 but still showing fast expansion.4
OIL MAKES ANOTHER WEEKLY ADVANCE
Crude is on a 4-week winning streak. At Friday’s closing bell, the price stood at $74.34 a barrel on the NYMEX, reflecting a 1.5% rise in five days. Again, worries over upcoming U.S. sanctions against Iran helped to send prices higher. WTI crude settled at $76.41 Wednesday, which approached a 4-year peak for the commodity.5
|% CHANGE||Y-T-D||1-YR CHG||5-YR AVG||10-YR AVG|
|REAL YIELD||10/5 RATE||1 YR AGO||5 YRS AGO||10 YRS AGO|
|10 YR TIPS||1.07||0.49||0.46||2.21|
Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Cambridge and Connecticut Capital Management Group LLC are not affiliated. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor.
Sources: wsj.com, bigcharts.com, treasury.gov – 10/5/182,6,7,8
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.
1 – thestreet.com/markets/stocks-rise-slightly-on-friday-after-september-jobs-report-14735092 [10/5/18]
2 – markets.wsj.com/us [10/5/18]
3 – bloomberg.com/news/articles/2018-10-05/u-s-payrolls-and-wages-cool-while-jobless-rate-hits-48-year-low [10/5/18]
4 – instituteforsupplymanagement.org/ISMReport/NonMfgROB.cfm?navItemNumber=30177 [9/26/18]
5 – marketwatch.com/story/us-oil-benchmark-ends-nearly-flat-but-tallies-a-4th-straight-weekly-rise-2018-10-05 [10/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F5%2F17&x=0&y=0 [10/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F5%2F17&x=0&y=0 [10/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F5%2F17&x=0&y=0 [10/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F4%2F13&x=0&y=0 [10/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F4%2F13&x=0&y=0 [10/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F4%2F13&x=0&y=0 [10/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F6%2F08&x=0&y=0 [10/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F6%2F08&x=0&y=0 [10/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F6%2F08&x=0&y=0 [10/5/18]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [10/5/18]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [10/5/18]