Volatility on Wall Street
Market Recap week ending 10/4/2019
It was an extremely volatile week on Wall Street. All of the major US indices declined last week on global growth concerns. For the week the S&P 500 lost -0.3%, the Dow shed -0.9%, the NASDAQ gave back 0-.5%, and the Russell 2000 lagged with a loss of -1.3%. The weak economic data sent US Treasuries soaring. The 2-year yield fell 23 basis points to close at 1.39% while the 10-year bond yield fell 16 basis points to close at 1.52%. Bond prices increase when yields fall. Gold was relatively quiet last week but did manage to post a small gain of $6 and change to close at 1512.80 an Oz. Oil, on the other hand, lost over 5% on the fears of less demand. WTI closed at $52.78 a barrel.
A weak ISM manufacturing report for September induced an early week sell-off, which saw the S&P 500 down as much as 4.1% over the first three sessions. The report came in at 47.8 which missed consensus estimates of 50.1 and was also lower than then August print of 50.2. A print lower than 50 indicates contraction in manufacturing while a print above 50 indicates expansion. This was the lowest ISM manufacturing report seen since June of 2009.
To make things worse, the ISM non- manufacturing report was reported on Tuesday and also missed the mark. The report came in at 52.6 versus the consensus estimate of 55.4 and was lower than the August print of 56.4. The services area remains in expansion with a reading above 50, but the report cast some doubt on the health of the consumer, which has held up pretty well because of the solid employment figures that we have seen for quite some time.
The employment situation report for September helped to stabilize the market late in the week. Non-Farm Payrolls were reported a bit under consensus at 136k, but the Unemployment rate hit a 50 year low coming in at 3.5%. Wage growth was unchanged in the report.
Of note, there were some significant changes concerning many brokerage firms last week. Charles Schwab, TD Ameritrade, and E*TRADE all announced cuts to their commission schedules, with many securities now able to be traded commission-free. The changes seemed to be inevitable, but with these changes in place now, it seems likely that even more change may be upon us in the space.
Darren Leavitt, CFA Portfolio Manager & Sr. Market Analyst