US Capital Markets Review 9/28/18

This week was a down week for the US capital markets, with the Dow Jones Industrial Average declining -1.1%, followed by the Russell 2000 at -0.9% and the S&P 500 at -0.5%. The Nasdaq was the only major index to advance, posting a weekly gain of +0.7%. So far this year, the Nasdaq is up +16.6% and the S&P 500 is up +9.0%. Large cap stocks did slightly better than small cap stocks, and growth stocks outperformed value stocks.

In terms of sector performance, telecom and health care did well, posting weekly gains of +1.1% and +0.9%, respectively. Financials and materials both struggled, posting weekly losses in excess of -4%. Gold was down -0.7%, closing at $1,191 per ounce. Silver had a good week, and was up +3.0%, closing at $14.73 per ounce. Oil did well also, and was +3.9% for the week, closing at $73.55 per barrel (West Texas Intermediate).

In economic and political news, the Fed board raised the short term interest rate by a quarter percent and forecasted one more rate hike this year. The trade war between the US and China escalated again, as the two countries continue to retaliate when the other puts tariffs on more goods. The Consumer Confidence Index also spiked this week, and the US dollar strengthened against other currencies. The political headlines were dominated by the Supreme Court nominee’s hearings related to alleged sexual assaults. The uncertainty and partisan politics played part in spooking the markets this week, and ultimately will continue to drag out as the vote was delayed until an FBI investigation could be performed, but with a one week deadline.

Big news also came out on Thursday as Elon Musk was served a complaint from the SEC on the now-infamous “taking Tesla private at $420, funding secured” tweet. The SEC alleges the information was fraudulent (or at least reckless) and designed to hurt short sellers. While the SEC compliant can result in civil financial penalties, there is no criminal element to this, but the complaint seeks to bar Mr. Musk from serving as an officer or director of a public company, putting his future as the leader of Tesla (the company he founded) in jeopardy. The markets see a potential Musk-less Tesla as a negative, and the stock tanked -14% on Friday. Actually, in looking at an update, news is out that Musk has settled.... he will resign as chairman of the Board but remain CEO of Tesla. The markets should see this as a good thing, so I would expect some of Friday’s losses to be recovered on Monday.

Cryptocurrencies were mixed for the week. Bitcoin is currently at $6,545, which is a weekly loss of -2.6%. Steem is currently at $0.94, which is a weekly gain of +4.4%. EOS is currently at $5.70, which is a weekly loss of -4.2%.

Thank you for reading my weekly US capital markets recap.

Brian