Weekly Market Recap

Week ended October 19

Market-moving news

Market-moving news

Market-moving news
Choppy comeback

On the heels of the most volatile week for stocks since February, stocks were mixed, with little change overall despite some big daily moves. The Dow posted a small gain, the S&P 500 was flat, and the NASDAQ slipped. Trading was bumpy, punctuated by sharp intraday swings throughout the week. 

Market-moving news
Volatility’s new normal?

After a six-month stretch of relative calm, market volatility remained elevated last week, with the Dow gaining nearly 548 points on Tuesday and losing 327 points on Thursday. Nevertheless, anxiety eased somewhat, as the Cboe Volatility Index’s high point was 21% below its peak of the previous week. 

Market-moving news
Trouble in China

Much of the week’s turbulence in global markets originated in China, where state intervention in markets helped ease a sell-off on Friday. One source of pressure was the government’s announcement that China’s economic growth slowed to a 6.5% annual rate, the weakest pace since 2009. A Chinese equity index has dropped more than 20% year to date. 

Market-moving news
Earnings uplift

Quarterly earnings season is entering its busiest stretch, and results of the biggest U.S. companies to date have largely exceeded expectations. With more than 15% of the companies in the S&P 500 Index having reported third-quarter numbers so far, 83% have reported net income that topped analysts’ forecasts, according to FactSet. 

Market-moving news
Brexit impasse

A midweek meeting between U.K. Prime Minister Theresa May and European Union leaders ended without a road map to resolve differences over terms of the U.K.’s breakup with the EU. With five months to go before the scheduled separation, both sides continued to prepare for the possibility that the talks will collapse without any deal. 

Market-moving news
Steady Fed

Wednesday’s release of minutes from the latest meeting of the U.S. Federal Reserve Board shows that members expect to continue gradually lifting interest rates if the economy keeps growing at its current pace and inflation remains under control. President Trump has recently criticized Fed policymakers, saying they’ve been raising rates too quickly. 

Oil loses traction

The recent rally for crude oil stalled, as prices slipped below the $70 per barrel threshold and dropped to their lowest level in more than a month. Among the factors that weighed on oil prices were rising U.S. supplies of crude and indications that China’s economic growth is slowing. 

GDP ahead

The U.S. government’s initial estimate of third-quarter GDP is expected to be one of the week’s most closely watched economic reports. Economists expect that Friday’s report will show a slowdown in growth relative to the second quarter’s solid 4.2% annual rate.  

The week ahead: October 22-26

Monday

  • No major reports scheduled     

 

 

 

Tuesday

  • No major reports scheduled  

 

Wednesday

  • New home sales, U.S. Census Bureau  

Thursday

  • Durable goods orders, U.S. Census Bureau
  • Pending home sales, National Association of Realtors

Friday

  • Third-quarter GDP, first estimate, U.S. Bureau of Economic Analysis
  • University of Michigan Index of Consumer Sentiment

 

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.

 

Hide disclosure

Investment returns

Equities

U.S. equity size and style total returns (%) as of 10/19/18
1 week
0.80.0-0.7 Large
0.60.0-0.9 Mid
-0.1-0.3-0.5 Small
Value Core Growth
YTD
0.34.79.0 Large
-2.00.33.0 Mid
-0.51.43.1 Small
Value Core Growth
Index/market total returns as of 10/19/18 (%)
Close Week YTD
Dow Jones Industrial Average 25,444.3 0.5 4.8
NASDAQ Composite Index 7,449.0 -0.6 8.8
S&P 500 Index 2,767.8 0.0 5.1
MSCI EAFE Index 1,849.4 -0.1 -7.2
Cboe Volatility Index 19.9 -6.6 80.3
International/developed (%)
1 week YTD
EAFE -0.1 -7.2
Europe 0.1 -8.2
France -0.5 -4.8
Germany -0.1 -13.4
Italy -1.0 -13.5
Japan -0.8 -4.0
Spain -0.4 -12.9
Switzerland 2.0 -4.0
U.K. -0.1 -8.2
Emerging markets (%)
1 week YTD
EM -0.9 -14.1
Brazil 3.5 0.2
China -1.9 -18.5
India -1.8 -17.0
Indonesia 2.5 -20.6
Korea -0.5 -17.2
Mexico -1.4 -2.3
Russia -1.1 4.5
Taiwan -1.5 -5.3
S&P 500 sectors (%)
1 week YTD
S&P 500 Index 0.0 5.1
Communication services 0.7 -3.6
Consumer discretionary -2.0 9.1
Consumer staples 4.4 -1.9
Energy -1.9 1.6
Financials 0.8 -3.2
Healthcare 0.5 12.2
Industrials -1.0 -2.1
Information tech -1.1 12.2
Materials -1.3 -10.8
Real estate 3.2 -0.8
Utilities 3.0 6.4

Fixed income, currencies, and commodities

U.S. fixed-income style total returns (%) as of 10/19/18
1 week
0.0-0.2-1.0 Large
-0.1-0.2-1.1 Mid Quality
0.0-0.1-0.2 Small
Value Core Growth
INTEREST RATE SENSITIVITY
YTD
1.0-1.0-8.4 Large
0.3-1.4-7.4 Mid Quality
4.01.5-1.2 Small
Value Core Growth
INTEREST RATE SENSITIVITY
U.S. Treasury bond yields as of 10/19/18 (%)
END OF WEEK PRIOR YEAR END YTD CHANGE (BPS)
2 Yr 2.91 1.88 +103
10 Yr 3.20 2.41 +79
30 Yr 3.38 2.74 +64
2-10 spread 0.29 0.53 -24
10-30 spread 0.19 0.33 -15
U.S. bond sector total returns (%)
1 week YTD
Aggregate -0.4 -2.5
Bank loans 0.1 3.6
Convertible 0.3 3.2
Corporate -0.4 -3.6
High yield -0.1 1.5
MBS -0.3 -1.9
Municipal 0.1 -1.1
Preferreds 1.0 -2.7
TIPS -0.5 -2.1
Treasury -0.3 -2.4
Global bond total returns (%)
1 week YTD
EM Local 0.9 -10.1
EMD USD -0.2 -4.5
Global Agg -0.3 -3.1
Global Agg Ex-U.S. -0.3 -3.5
Multiverse -0.3 -3.1
Commodities (%)
1 week YTD
BBG Com Ind -0.3 -1.0
Oil (WTI) -2.4 21.1
Gold 0.6 -6.8
Currencies (USD) (%)
1 week YTD
EM FX 0.5 -6.0
AUD 0.2 -8.8
CAD -0.6 -4.4
CHF -0.4 -2.2
EUR -0.6 -4.3
GBP -0.9 -3.6
JPY -0.3 0.1

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 9/30/18

as tracked by Strategic Insight
MONTH 12 Month ASSETS
U.S. equity 9.3 -6.1 8,410.2
Sector equity 2.6 11.2 931.7
Allocation -5.4 -44.6 1,280.9
International equity 0.8 142.2 3,174.5
Alternative -2.6 -2.3 204.4
Commodities 0.2 1.7 88.8
Taxable bond 21.1 288.4 3,752.8
Municipal bond -0.3 20.4 710.6
Total all long-term funds 20.3 379.5 18,572.6

Leading Morningstar fund categories by monthly net flows ($B) as of 9/30/18

MONTH 12 Month ASSETS
Large Blend 8.8 49.4 3,434.6
Intermediate-Term Bond 6.4 105.8 1,405.6
Ultrashort Bond 5.1 66.0 192.3
Foreign Large Blend 4.0 105.0 1,224.5
Long Government 2.8 16.3 48.7

Lagging Morningstar fund categories by monthly net flows ($B) as of 9/30/18

MONTH 12 Month ASSETS
Allocation--30% to 50% Equity -2.3 -13.5 214.7
World Allocation -2.3 -11.8 303.5
Large Growth -1.9 -34.1 1,808.7
World Large Stock -1.5 -5.7 408.9
Europe Stock -1.3 -13.0 62.7
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.

Hide disclosure