Weekly Expert Perspectives PAS

Facebook Flop Steals Trade-Deal Thunder

Stocks moved mostly higher this week, sending the S&P 500 within 1.5% of its January 26 record high, with investors focused on a potential U.S.-EU trade deal and the latest batch of Q2 earnings, which featured results from high-flying FAANG names like Facebook (FB), Amazon (AMZN), and Alphabet (GOOG).

The S&P 500 advanced 0.6%, and the Dow Jones Industrial Average climbed 1.6%. The tech-heavy Nasdaq struggled, however, losing 1.1%, due in large part to Facebook's 19% plunge on Thursday -- which marked the biggest-ever one-day drop in market value for a U.S.-listed company (-$119.1 billion).

Facebook tumbled in response to its Q2 earnings report, which showed below-consensus revenues and slowing user growth, due in part to the #DeleteFacebook movement following the Cambridge Analytica data scandal. In addition, the social media giant also issued below-consensus revenue guidance. However, Google's parent company Alphabet and internet-retail behemoth Amazon helped balance things out with better-than-expected results.

Still, the top-weighted technology sector, which houses most FAANG names, was the worst-performing group this week, diving 1.2%. Conversely, financials was among the top-performing spaces with a gain of 2.0%, benefiting from a rise in interest rates; the yield on the benchmark 10-yr Treasury note climbed six basis points to 2.96%.

On the data front, the preliminary reading for second quarter GDP showed an annualized increase of 4.1%, in line with the Briefing.com consensus estimate and the best reading since the third quarter of 2014. Consumer spending was the main engine of growth, increasing 4.0% and contributing 2.69 percentage points.

In politics, President Trump met with European Commission President Jean-Claude Juncker at the White House on Wednesday. Stocks spiked that afternoon on headlines that Mr. Trump has secured trade concessions from the EU, including a pledge to import more soybeans and natural gas from the U.S. and to improve market access for U.S. medical devices. The two sides also decided to table auto tariffs while they continue to negotiate.

The European Central Bank decided on Thursday to keep its key policy rate unchanged, as expected, and reiterated that net asset purchases will likely cease at the end of December, with the reinvestment of principal payments continuing for an extended period of time thereafter.

Looking ahead, the Federal Reserve will release its latest policy directive on Wednesday. The market isn't expecting a rate hike, but investors will be interested to see what the central bank has to say about future rate increases this year; currently, the market is anticipating two additional hikes by year's end.

To download the printable version, CLICK HERE.

S&P 500 Index is a market index generally considered representative of the stock market as a whole. The index focuses on the large-cap segment of the U.S. equities market. Indices are unmanaged and one cannot invest directly in an index. Each company’s security affects the index in proportion to its market value. NASDAQ Composite Index is a market value-weighted index that measures all NASDAQ domestic and non-U.S. based common stocks listed on the NASDAQ stock market. Dow Jones Industrial Average is a widely-used indicator of the overall condition of the stock market, a price-weighted average of 30 actively traded blue chip stocks, primarily industrials, but also includes financial, leisure and other service oriented firms. Data and rates used were indicative of market conditions as of the date shown and compiled by briefing.com. Opinions, estimates, forecasts, and statements of financial market trends are based on current market conditions and are subject to change without notice. References to specific securities, asset classes and financial markets are for illustrative purposes only and do not constitute a solicitation, offer, or recommendation to purchase or sell a security. Past performance is not a guarantee of future results. Russell 2000 Index measures the performance of the smallest 2,000 companies in the Russell 3000 Index of the 3,000 largest U.S. companies in terms of market capitalization. MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. Chicago Board Options Exchange Volatility Index (VIX) tracks the expected volatility in the S&P 500 Index over the next 30 days. A higher number indicates greater volatility.

Park Avenue Securities LLC (PAS) is an indirect, wholly-owned subsidiary of The Guardian Life Insurance Company of America (Guardian). PAS is a registered broker/dealer offering competitive investment products, as well as a registered investment advisor offering financial planning and investment advisory services. PAS is a member of FINRA and SIPC. Provided by Briefing.com

2018-63794 (Exp 10/18)