Market Recap week ending 12/28/18

-Darren Leavitt, CFA

Wow, what a week for the markets- if you were out for the holidays you missed a historic week on Wall Street.  Extremely oversold conditions coupled with year-end portfolio rebalancing and the fact that many were out for the holiday produced some crazy market action.  A continuation of the prior week’s sell-off ensued on abbreviated Monday session with the S&P 500 closing down 2.9%.

Concerns regarding the government shutdown, an impromptu call made by Treasury Secretary, Steven Mnuchin, to the CEO’s of the six largest US banks, and rumors that Trump was going to replace Fed Chairman Powell fueled the sell-off.  However, the markets ripped higher on Wednesday gaining 5% across all the major indices.  Oversold conditions, short covering, and some favorable commentary about holiday retail sales from Amazon cranked out one of the best single day moves in history.

On Thursday, the markets spent most of the day in the red losing as much as 2.9%, but in the last 90 minutes of trade, the markets had a massive reversal closing up 0.9%.  Interestingly there was no apparent catalyst for the move.  Friday’s session also produced whipsaw action for investors and ended off 0.10%.  For the week the S&P 500 gained 2.86%, the Dow added 2.75%, the NASDAQ increased 3.97%, and the Russell 2000 increased by 3.55%.  Despite the higher move in equities, safe-haven Treasuries were resilient.  The 2-year note yield closed at 2.52%, and the Ten-year closed at 2.74%.  There were no changes to our models last week.

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