Weekly Update - December 28, 2018
- Stocks globally closed out 2018 with a tumultuous week of trading. While all three major US indices ended on a positive note and snapped a three-week losing streak, all were on track to post their first annual losses since 2008. U.S. Treasury yields eased as the week progressed, driven by stock market volatility and signs of a potential economic slowdown heading into the New Year. Oil prices moved in tandem with stocks, finishing the week higher, too.
- By the market’s close on Christmas Eve, the S&P 500 had dropped 20.06% since hitting its all-time high of 2940.91 on 9/21/18, officially moving the index into bear-market territory and putting an end to a bull run that lasted since the close of 676.53 on 3/9/09. Other market indices had recently slipped into bear market territory as well, including the Nasdaq Composite (down 23.86% from its 52-week high of 8133.30 from 8/30/18) and the Russell 2000 (down 27.28% from its 52-week high of 1742.09 from 8/31/18). However, the day after Christmas the Dow and S&P 500 each posted their biggest one-day point gains ever, and all three major indices posted best the percentage gains since March of 2009.
- Consumer confidence for December fell more than expected to 128.1 from November’s 136.4, marking the lowest measure since July. Meanwhile, initial jobless claims were down 1000 week over-week to 216K. The Commerce Department’s new home sales report was not released due to the government shutdown.
- Chicago PMI for December ticked down one point to 65.4, but beat estimates of 61.2. The report showed back orders at the highest level since July, and production rising to 11-month high.
- On December 19, as expected, the FOMC raised the Federal funds target rate another 25 basis points, to a range of 2.25–2.50%. Importantly, officials released new interest rate projections for 2019 that signaled a milder path of rate increases than previously communicated. Officials’ median projection of the neutral interest rate, which neither spurs nor slows growth, edged down to 2.75% from 3%. The latest increase leaves the Fed roughly one interest rate move away from that neutral setting.