US Capital Markets Review 9/7/18

The US capital markets had a rough week, with the Nasdaq posting a weekly loss of -2.6%, followed by the Russell 2000 at -1.6%. The Dow Jones Industrial Average was able to perform the best of the major benchmarks, posting a weekly loss of -0.2%. Value stocks outperformed growth stocks, and there was no clear winner between large, mid and small cap stocks.

In terms of sector performance, consumer staples and utilities posted a weekly gain of +1.0%, while information technology retreated -2.9%. Energy also struggled with a weekly loss of -2.3%. Gold was down -0.4% for the week, closing at $1,196 per ounce. Silver really struggled and was down -2.7% for the week, closing at $14.14 per ounce. Oil fell this week as well, posting a loss of -2.9% and closing at $67.85 per barrel (West Texas Intermediate). The VIX spiked +15.7% on the wild week.

Perhaps the biggest contributor to the poor week was the continued trade war between the US and China, with fallout starting to be felt in different industries in the US, and threats of even more tariffs seemingly daily. The lack of ability to reach a trade deal with Canada is also causing some concern. Additional drama surrounding the President’s potential legal woes, Russian interference, congress questioning of Facebook/Twitter executives, Tesla’s Musk antics, Supreme Court nominee Brett Kavanaugh hearings, among other things, contributed to the weekly loss. On the positive side, unemployment remained at historic lows, and average wages jumped to 2.9% when compared to one year ago. In somewhat of a surprise, the US trade deficit widened significantly, up 10% from June to July, so perhaps all the trade discussions are not having as big an effect as once believed.

Cryptocurrencies had a nightmare of a week. Bitcoin got slammed by the news that Goldman Sachs had abandoned a previously announced plan to establish a cryptocurrency trading desk, which ended up being false and was simply “fake news”. Once this came to light, the damage had already been done as Bitcoin was down -13.6% for the week, currently at $6,180. Altcoins also got nailed, retreating significantly. Steem was down -24.1% for the week, currently at $0.77. EOS was down -26.9% for the week, currently at $4.75.

Despite the rough week, there have been many positive weeks. The broad S&P 500 and Russell 2000 indices are up +7.4% and +11.6%, respectively, year to date.

Good luck with your investing!

Brian