The 1% Market Move: 01/18/2019

The Bottom Line
  • S&P 500 up +1.32%
  • Stoxx Europe 600 up +1.80%
  • Shanghai Composite Index up +1.42%
So What Happened?

The S&P 500 registered its second +1% move of the week, closing up 1.32%, while broader Europe and Asia ended on the plus side as well.  For the week, the S&P 500 is up +3.52% as it slowly tries to dig its way out of the correction-sized hole that started back in late September 2018. The U.S. market has now posted positive returns each week since Christmas (four weeks).

So what drove the markets today? They say history repeats itself, and today proved no exception as a slew of familiar-sounding headlines left investors in an upbeat mood. Specifically – positive trade news out of China, an announcement on interest rates from the Fed, and a report on U.S. manufacturing output in December.

In regards to China, officials announced a supposed plan to purchase more than $1 Trillion of U.S. goods through 2024 in an attempt to reduce the trade deficit to $0. For reference, the U.S. had a $323 billion trade deficit in 2018. Though this announcement is promising and is proof of improving relations between both countries, history tells us to reserve judgment until a final deal is put on paper and these commitments are put to action.

In economic news, NY Fed President John Williams pleased traders today with language that the Federal Reserve should approach future interest rate increases with “prudence, patience, and good judgment”.  Our readers will recall the market has been especially jumpy at the prospect of higher interest rates, so additional language that the Fed is open to keeping rates at bay was taken as a positive sign.  And finally, fears that the U.S. economy may be slowing down were dealt a blow today after a report showed U.S. manufacturing output increased by the most in almost a year in December.

Given the back-and-forth nature of these news stories, it seems prudent to remain cautious and avoid the line of thinking that all these problems have been solved overnight. The market has been sensitive, in both directions, to developments in the trade war, interest rates, and the global economy as a whole. That is why we firmly believe “trading on the news” is a fool’s game. Rather, during volatile times it is generally most important to revisit your financial plan and stick to your long-term outlook. ​

Disclosures:

Taylor Hoffman is an SEC registered investment adviser with its principal place of business in the State of Virginia. Any references to the terms “registered investment adviser” or “registered,” do not imply that Taylor Hoffman or any person associated with Taylor Hoffman have achieved a certain level of skill or training. Taylor Hoffman may only transact business in those states in which it is registered /notice filed, or qualifies for an exemption or exclusion from registration /notice filing requirements. For information pertaining to the registration status of Taylor Hoffman or for additional information about Taylor Hoffman, including fees and services, please visit www.adviserinfo.sec.gov.

The information contained herein is provided for informational purposes only and should not be construed as the provision of personalized investment advice, or an offer to sell or the solicitation of any offer to buy any securities. Rather, the contents including, without limitation, any forecasts and projections, simply reflect the opinions and views of the author. All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change without notice. There is no guarantee that the views and opinions expressed herein will come to pass. This document contains information derived from third party sources. Although we believe these third party sources to be reliable, Taylor Hoffman makes no representations as to the accuracy or completeness of any information derived from such third-party sources and takes no responsibility therefore.

The S&P 500 is a market capitalization weighted index of 500 leading U.S. companies and one of the most common benchmarks for the broader U.S. equity markets.

The NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The Nasdaq Stock Market. Launched in 1971, the NASDAQ Composite Index is a broad based Index. Today, the Index includes over 3,000 securities, more than most other stock market indices. The NASDAQ Composite is calculated under a market capitalization weighted methodology index. To be eligible for inclusion in the Composite the security’s U.S. listing must be exclusively on the Nasdaq Stock Market (unless the security was dually listed on another U.S. market prior to January 1, 2004 and has continuously maintained such listing), and have a security type of either: American Depositary Receipts (ADRs); Common Stock; Limited Partnership Interests; Ordinary Shares; Real Estate Investment Trusts (REITs); Shares of Beneficial Interest (SBIs); Tracking Stocks. Security types not included in the Index are closed-end funds, convertible debentures, exchange traded funds, preferred stocks, rights, warrants, units and other derivative securities. If at any time a component security no longer meets the above eligibility criteria, the security is removed from the Composite Index.

The Stoxx Europe 600 is a subset of the STOXX Global 1800 Index. With a fixed number of 600 components, the STOXX Europe 600 Index represents large, mid and small capitalization companies across 17 countries of the European region: Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.

The Shanghai Composite Index is a market capitalization weighted index made up of all the A-share and B-shares that trade on the Shanghai Stock Exchange. If at any time a component security no longer meets the above eligibility criteria, the security is removed from the Composite Index.

Past performance is not an indication or guarantee of future results. Investing in securities involves risks, including the potential loss of all amounts invested.

Taylor Hoffman makes no representation, express or implied, as to the accuracy, timeliness, or completeness of any of the research contained herein or with regard to the results to be obtained from its use. In no event will Taylor Hoffman or any party associated with Taylor Hoffman be liable for any direct or indirect trading losses caused by any information contained in this report. Readers must conduct their own independent analysis of the information contained herein before making any investment decisions.