Weekly Market Commentary, November 20, 2018

November 20, 2018  | By Robare & Jones

The Markets

After two straight weeks of 2 percent-plus returns, the S&P 500 was down 1.6 percent last week. Global stocks also declined, pushing the MSCI ACWI down 1.2 percent last week. Bonds had a positive week, as the Bloomberg BarCap Aggregate Bond Index was up 0.5 percent.

 

Data as of 11/16/2018 1-week YTD 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) -1.6% 2.3% 5.8% 10.1% 8.8% 12.4%
Dow Jones Global ex-U.S. -0.8 -12.4 -9.9 3.4 -0.3 5.6
10-year Treasury Note (Yield Only) 3.1 NA 2.4 2.3 2.7 3.7
Gold (per ounce) 0.9 -5.7 -4.5 4.1 -1.0 5.2
Bloomberg Commodity Index 1.2 -4.8 -2.0 0.6 -7.3 -3.8
DJ Equity All REIT Total Return Index 0.4 2.7 1.7 8.2 9.5 15.5

S&P 500, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

Download Market Data Table

 

Global Uncertainty

As the second longest bull market in U.S. history remains in full effect, investors seem to be factoring in expectations that companies will do better than analysts expect. So far this quarter, 87 percent of companies have beat earnings estimates with a surprise percentage of 4.5 percent, both percentages being way above five-year averages.

Corporations are able to beat expectations so consistently by deliberately managing expectations lower and then beating that target. But, investors have become wise to the tactic. As the accompanying chart shows, beating earnings now results in little to no price gain, while missing results in a large price drop. There used to be a modest reward for beating expectations, but it has now disappeared.

 

Fun Story

Sneaky dog goes viral after it drinks owners’ beer
A dog was caught drinking its owner’s beer by a man who happened to witness it from a bus window. Jake Pulford captured the hilarity by taking pictures, which appear to show the dog checking to make sure the coast was clear before helping itself to the delicious beverage. The owner was unaware of the dog’s actions.