Weekly Market Recap

Week ended October 11

Market-moving news

Market-moving news

Market-moving news
Back on track

A rally on Friday propelled the major U.S. stock indexes to weekly gains of around 1%, snapping a three-week string of declines. Developments in the U.S.-China trade dispute were the key catalyst, playing a big role in a market decline on Tuesday and Friday’s comeback rally. 

Market-moving news
Trade progress

About 10 minutes before U.S. markets closed on Friday, U.S. and Chinese negotiators announced a partial trade deal between the world’s two largest economies. The tentative agreement includes a U.S. retreat from a threatened tariff increase, a Chinese commitment to buy U.S. farm products, and language addressing differences over intellectual property and financial services.  

Market-moving news
Earnings slump

With major banks set to open quarterly earnings season this week, earnings across the broad market are expected to decline for the third quarter in a row—something that hasn’t happened in nearly four years. Profits for companies in the S&P 500 are expected to decline more than 4% compared with the same quarter a year ago, according to FactSet.

Market-moving news
Brexit optimism

Progress was reported in informal Brexit talks between the United Kingdom and the European Union, leading to expectations of an October 17 meeting between EU leaders and U.K. Prime Minister Boris Johnson. U.K. stocks and the British pound rallied on news of the potential breakthrough ahead of an October 31 Brexit deadline. 

Market-moving news
Weak inflation

The latest reading on U.S. inflation showed that the Consumer Price Index was unchanged in September relative to the prior month, the weakest inflation reading in eight months. The latest data could alleviate concerns that further interest-rate cuts by the U.S. Federal Reserve could unleash a spike in inflation. 

Market-moving news
Fed backstop

The U.S. Federal Reserve announced plans to buy Treasury debt to increase the size of its balance sheet and prevent a recurrence of recent stresses in the repo market, which provides short-term funding for corporate borrowers. The Fed planned to begin initial purchases of $60 billion in Treasury bills starting Tuesday. 

Market-moving news
Yield recovery

The bond price rally of recent weeks stalled, as the yield of the 10-year U.S. Treasury bond climbed to its highest level in three weeks, exceeding 1.70% on Friday. Yields also climbed in other key developed markets, owing in part to indications of progress by negotiators trying to resolve the U.S.-China trade dispute and the Brexit impasse. 

Market-moving news
Crude awakening

Recently depressed oil prices recovered somewhat, climbing above $54 per barrel for U.S. crude on Friday, amid the latest sign of geopolitical tensions in the Middle East. An Iranian oil tanker was damaged near Saudi Arabia’s coastline in what the ship’s owner said may have been a missile attack.

The week ahead: October 14–18

Monday

  • No major reports scheduled   

Tuesday

  • No major reports scheduled  

Wednesday

  • Retail sales, U.S. Census Bureau
  • Business inventories, U.S. Census Bureau 
  • Housing Market Index, National Association of Home Builders

 

Thursday

  • Housing starts, U.S. Census Bureau
  • Industrial production and capacity utilization, U.S. Federal Reserve 

 

Friday

  • The Conference Board Leading Economic Index for the U.S.
Important disclosures

Unless otherwise noted, all data is from FactSet.

The data provided is for informational purposes only and is not an endorsement of any security, mutual fund, sector, or index. This does not illustrate the performance of any John Hancock fund. The information contained here is not guaranteed as to accuracy or completeness. All economic and performance information is historical and does not guarantee future results.

The Dow Jones Industrial Average is a price-weighted index comprising 30 widely traded blue chip U.S. common stocks. The NASDAQ Composite Index is a market-value-weighted index of all common stocks listed on the NASDAQ stock exchange. The S&P 500 Index tracks the performance of 500 of the largest publicly traded companies in the United States. The MSCI Europe, Australasia, and Far East (EAFE) Index tracks the performance of publicly traded large- and mid-cap stocks of companies in those regions. The Cboe Volatility Index (VIX) shows the market’s expectation of 30-day volatility and is constructed using the implied volatilities of a wide range of S&P 500 Index options. Weekly and year-to-date figures for the VIX show percentage changes, not investment returns. It is not possible to invest directly in an index.

The Treasury yield curve is derived from available U.S. Treasury securities trading in the market and is provided directly by the U.S. Federal Reserve. The spread measures the difference in yield between two government securities. A normal (positive) yield curve occurs when longer-term rates are higher than shorter-term rates. The opposite holds true for an inverted yield curve. Year-to-date changes in U.S. Treasury bond yields are shown in basis points (BPS).  One hundred basis points equals one percent.

Oil prices are represented by West Texas Intermediate (WTI) crude oil.

The G20 countries comprise a mix of the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85% of global gross domestic product, and over 75% of global trade.

 

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Investment returns

Equities

U.S. equity size and style total returns (%) as of 10/11/19
1 week
0.50.70.8 Large
0.40.50.7 Mid
0.90.80.7 Small
Value Core Growth
YTD
16.720.424.1 Large
17.921.225.8 Mid
11.813.414.7 Small
Value Core Growth
Index/market total returns as of 10/11/19 (%)
Close Week YTD
Dow Jones Industrial Average 26,816.6 0.9 17.1
NASDAQ Composite Index 8,057.0 0.9 22.5
S&P 500 Index 2,970.3 0.7 20.4
MSCI EAFE Index 1,896.7 2.3 13.8
Cboe Volatility Index 15.6 -8.2 -38.6
International/developed (%)
1 week YTD
EAFE 2.3 13.8
Europe 3.5 15.3
France 3.6 18.2
Germany 4.1 12.6
Italy 3.7 20.4
Japan -0.2 11.5
Spain 4.1 7.5
Switzerland 1.4 23.2
U.K. 4.6 11.1
Emerging markets (%)
1 week YTD
EM 1.5 7.4
Brazil 0.1 11.3
China 2.2 10.4
India 0.9 0.7
Indonesia 0.4 0.5
Korea 2.5 -0.2
Mexico 0.6 8.2
Russia 3.2 32.9
Taiwan 0.5 18.5
S&P 500 sectors (%)
1 week YTD
S&P 500 Index 0.7 20.4
Communication services 1.0 22.8
Consumer discretionary 1.0 22.4
Consumer staples -0.8 22.4
Energy 1.0 3.8
Financials 0.8 18.1
Healthcare -0.2 5.4
Industrials 1.6 21.3
Information tech 1.3 33.2
Materials 1.9 15.5
Real estate -0.6 29.3
Utilities -1.4 23.8

Fixed income, currencies, and commodities

U.S. fixed-income style total returns (%) as of 10/11/19
1 week
-0.1-0.8-3.6 Large
-0.3-0.6-2.0 Mid Quality
0.20.30.5 Small
Value Core Growth
INTEREST-RATE SENSITIVITY
YTD
2.85.117.7 Large
3.26.121.7 Mid Quality
6.411.318.3 Small
Value Core Growth
INTEREST-RATE SENSITIVITY
U.S. Treasury bond yields as of 10/11/19 (%)
END OF WEEK PRIOR YEAR END YTD CHANGE (BPS)
2 Yr 1.61 2.21 -60
10 Yr 1.75 2.39 -64
30 Yr 2.21 2.82 -61
2-10 spread 0.15 0.18 -4
10-30 spread 0.46 0.43 +3
U.S. bond sector total returns (%)
1 week YTD
Aggregate -1.0 8.2
Bank loans -0.3 6.0
Convertible -0.4 14.3
Corporate -1.3 13.6
High yield 0.3 11.3
MBS -0.3 5.6
Municipal -0.3 7.0
Preferreds -0.1 16.5
TIPS -1.2 7.4
Treasury -1.4 7.3
Global bond total returns (%)
1 week YTD
EM Local 0.3 7.8
EMD USD -0.3 13.1
Global Agg -0.8 6.2
Global Agg Ex-U.S. -0.7 5.1
Multiverse -0.8 6.4
Commodities (%)
1 week YTD
BBG Com Ind 1.2 4.6
Oil (WTI) 3.9 19.8
Gold -1.6 15.5
Currencies (USD) (%)
1 week YTD
EM FX -0.3 1.7
AUD 0.5 -3.5
CAD 0.9 3.5
CHF -0.3 -1.3
EUR 0.5 -3.5
GBP 3.2 -0.4
JPY -1.6 1.0

U.S. economy

GDP

Jobs

Inflation

Ex-U.S.

Regions/countries

Fund industry overview

Total net flows: open-end funds and ETFs ($B) as of 9/30/19

as tracked by Strategic Insight
MONTH 12 Month ASSETS
U.S. equity 0.9 -21.1 8,452.4
Sector equity -1.5 -69.8 886.8
Allocation -4.0 -66.0 1,262.7
International equity -4.9 -10.9 3,101.3
Alternative 0.0 -20.0 178.7
Commodities 2.7 11.5 106.4
Taxable bond 35.0 211.8 4,212.8
Municipal bond 5.8 67.4 827.1
Total all long-term funds 33.4 74.0 19,041.3

Leading Morningstar fund categories by monthly net flows ($B) as of 9/30/19

MONTH 12 Month ASSETS
Intermediate Core Bond 10.9 57.5 921.4
Large Blend 9.8 108.6 3,810.9
Intermediate Core-Plus Bond 6.9 32.3 704.9
High-Yield Bond 6.3 0.6 297.9
Inflation-Protected Bond 4.2 1.1 163.9

Lagging Morningstar fund categories by monthly net flows ($B) as of 9/30/19

MONTH 12 Month ASSETS
Large Growth -8.0 -63.0 1,724.7
World Allocation -2.8 -31.0 281.6
Health -2.3 -13.3 157.2
Foreign Large Value -2.0 -17.4 191.6
Bank Loan -1.9 -49.8 101.0
Important disclosures

Unless otherwise noted, all data is from FactSet.

The data provided is for informational purposes only and is not an endorsement of any security, mutual fund, sector, or index. This does not illustrate the performance of any John Hancock fund. The information contained here is not guaranteed as to accuracy or completeness. All economic and performance information is historical and does not guarantee future results.

The Dow Jones Industrial Average is a price-weighted index comprising 30 widely traded blue chip U.S. common stocks. The NASDAQ Composite Index is a market-value-weighted index of all common stocks listed on the NASDAQ stock exchange. The S&P 500 Index tracks the performance of 500 of the largest publicly traded companies in the United States. The MSCI Europe, Australasia, and Far East (EAFE) Index tracks the performance of publicly traded large- and mid-cap stocks of companies in those regions. The Cboe Volatility Index (VIX) shows the market’s expectation of 30-day volatility and is constructed using the implied volatilities of a wide range of S&P 500 Index options. Weekly and year-to-date figures for the VIX show percentage changes, not investment returns. It is not possible to invest directly in an index.

The Treasury yield curve is derived from available U.S. Treasury securities trading in the market and is provided directly by the U.S. Federal Reserve. The spread measures the difference in yield between two government securities. A normal (positive) yield curve occurs when longer-term rates are higher than shorter-term rates. The opposite holds true for an inverted yield curve. Year-to-date changes in U.S. Treasury bond yields are shown in basis points (BPS).  One hundred basis points equals one percent.

Oil prices are represented by West Texas Intermediate (WTI) crude oil.

The G20 countries comprise a mix of the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85% of global gross domestic product, and over 75% of global trade.

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