Weekly Expert Market Perspectives Park Avenue Securities PAS

Stocks Revisit October Highs

The stock market endured a volatile start to the week, but a strong second half helped the major averages secure gains. The S&P 500 rose 0.6% while the Nasdaq Composite outperformed, gaining 0.9% since last Friday.

Trade-related headlines were the focus of the week, which saw the latest round of talks between officials from China and the U.S on Thursday and Friday. The S&P 500 fell below its 50-day moving average early in the week when it was announced that 28 Chinese companies were put on a blacklist that blocks them from doing business with U.S. companies without a special license. The news led to concerns that official discussions on Thursday and Friday would not yield any results.

However, the overall tone improved on Wednesday and Thursday amid a torrent of mostly positive-sounding headlines. The S&P 500 reclaimed its 50-day moving average on Thursday, jumping to a ten-day high on Friday. The Friday session featured news about a partial trade deal being reached, but the details were underwhelming. Also on Friday, the Federal Reserve announced that it will begin regular purchases of Treasury bills at a pace of $60 bln per month on October 15 and continue into the second quarter of 2020 or longer.

Seven out of eleven sectors ended the week with gains, climbing between 0.8% (communication services) and 1.9% (materials). On the downside, countercyclical real estate (-0.6%), consumer staples (-0.9%), and utilities (-1.4%) recorded losses as Treasury yields rose amid an improvement in risk tolerance.

Apple (AAPL) rallied 3.9% to a fresh record high, boosted by news about increased production of components for the iPhone 11. Utility provider PG&E (PCG) lost more than 25.0% for the week on a negative court ruling.

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Past performance is not a guarantee of future results. Indices are unmanaged and one cannot invest directly in an index. Diversification does not guarantee investment returns and does not eliminate the risk of loss.

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. 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. 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. 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.

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2019-87886 (Exp 1/20)