Stock markets rallied on solid economic data last week. The S&P 500 soared 1.2%, and the MSCI ACWI rose 0.3%. The Bloomberg BarCap U.S. Aggregate Bond Index slipped -0.2% as rate pressures continued to increase.
Economic releases are difficult to analyze because hurricanes Harvey and Irma have impacted prices and activity. Rebuilding and replacing property has pushed some economic measures higher, while the storms increased the number of unemployed in other measures. One measure of the labor market showed a decline of 33,000 jobs, but another suggested hiring remains rapid and the economy remains strong.
Key points for the week
- Hurricanes are having a wide economic effect.
- Manufacturing activity and auto sales are higher.
- Hiring slowed according to one measure but otherwise remained healthy.
What are we reading?
Below are some areas of the market we paid particularly close attention to this week. For further information, we encourage our readers to follow the links.
Hurricanes Harvey and Irma have pushed manufacturing to a 13-year high. The increase in demand from the impact of the hurricanes has boosted raw material prices and created longer delivery times, all favorable measures for the Institute for Supply Management’s national factory activity index, which jumped to 60.8 last month. Although a significant factor, this gain isn’t fully attributed to the hurricanes. According to John Ryding, chief economist at RDQ Economics in New York, markets are bullish on manufacturing without including the impact of Irma and Harvey.
New car sales surged in September due to the effects of hurricanes Harvey and Irma, providing automakers their first monthly increase in sales for the year. The recent activity has been a boon for stocks like GM and Ford, but experts say high inventory levels and record high consumer discounts will be points of concern moving forward.
The northeastern province of Spain, Catalonia, held an election to form its own independent country on October 1. Tens of thousands of people from Catalonia gathered in Barcelona to cast their ballots on Election Day, which resulted in little outcome as national police were called in by the central government in Madrid to confiscate ballot boxes. The leader of the independent movement, Carles Puigdemont, claimed a moral victory due to the amount of voters who showed up.
Fun Story of the Week
Blood is always thicker than water, but fandom may have it beat. Denver Broncos running back C.J. Anderson found out before his big game against divisional rivals Oakland Raiders that his mother would be rooting against her son on Saturday. Anderson said his mother made it clear to him that she loved him, but she could not go against her beloved Raiders. Anderson said he loves his mother’s honesty and knows she will be rooting for him individually in the game.
This newsletter was written and produced by CWM, LLC. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The views stated in this letter are not necessarily the opinion of CWM, LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.
S&P 500 INDEX
The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
MSCI ACWI INDEX
The MSCI ACWI captures large- and mid-cap representation across 23 developed markets (DM) and 23 emerging markets (EM) countries*. With 2,480 constituents, the index covers approximately 85% of the global investable equity opportunity set.
Bloomberg U.S. Aggregate Bond Index
The Bloomberg U.S. Aggregate Bond Index is an index of the U.S. investment-grade fixed-rate bond market, including both government and corporate bonds.