Weekly Market Update – Nov. 12, 2018

Last Week

  • Despite losses in emerging markets, global equities (1.0%) moved higher for the second week in a row. U.S. equities led the way with a 1.8% return, followed by non-U.S. developed markets (0.2%) and emerging markets (-1.9%).
  • At last Thursday’s meeting, the Federal Reserve maintained guidance for gradual rate hikes over the next year with the meeting statement expressing a positive view on the U.S. economy given low unemployment, strong household spending, higher wage growth and near-target inflation
  • Last Tuesday’s midterm election resulted in a split Congress, with Democrats gaining control of the House of Representatives and a continued Republican majority in the Senate. The split Congress increases the odds of a struggle to find common ground on issues like health care, taxes, and infrastructure.
  • With earnings in from 90% of S&P 500 companies, aggregate year-over-year earnings growth (26.8%) and revenue growth (8.4%) continue to exceed expectations

This Week

  • With a few weeks left to report earnings for the third quarter, many of the remaining companies will come from the consumer discretionary sector
  • Global inflation readings set to remain close to prior levels
  • The European Commission rejected Italy’s original budget as it exceeded the allowable deficit and requested a revised version due this Tuesday. Italy is unlikely to make major changes and further disagreement could affect Italy government debt yields.


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