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Weekly Market Update for August 31, 2018

by JM Hanley

The Dow was down on Friday, falling twenty-two points to close at 25,965. For the week, the Dow rose 0.7% (SP500 +0.9%) and year-to-date is now up 5.0% (SP500 +8.5%). The yield on the 10-year Treasury (an important interest-rate indicator) rose five basis points, closing at 2.86%. Technology, healthcare, and consumer discretionary stocks performed well. Banks, oil companies, and industrial firms underperformed.

It was another sleepy week in the dog days of summer. The major indexes drifted upward, buoyed by Fed Chair Jerome Powell’s reiterating his intent to raise interest rates gradually. China’s decision to stabilize the yuan in the face of a strengthening dollar also was encouraging.

High drama persists in the renegotiation of NAFTA. Negotiators for the US and Mexico apparently agreed to new terms on Monday, though the release was light on details. Talks with Canada broke up today with both sides still far apart on the most difficult issues. Discussions will resume on Wednesday. The current state of play suggests a deal with Mexico alone may result, but that could hit a procedural roadblock in Congress. Across the Pacific, the Administration reportedly will impose tariffs on an additional $200 billion in Chinese goods. These had first been proposed a few weeks ago.

Americans are as optimistic as ever about the economy. Consumer confidence reached its highest point since 2000 this month. More respondents said it was easy to find work, and most have high expectations for the future. The new numbers contrast with a report earlier this month from the University of Michigan. It found that confidence had fallen. But that report showed that poorer consumers had grown more pessimistic, which dragged down the whole group. Higher consumer confidence typically bodes well for discretionary spending.

The housing market continues to be the odd one out. With the rest of the economy booming, pending home sales fell last month. The price of oil rose minimally this week, to $69 a barrel.

Nutanix reported a fiscal fourth quarter on Thursday beating the Street’s estimates; however, the company’s revenue guidance for next quarter was a little soft due to a one-off item. Nutanix is launching a number of new products in the next 18 months that will help the company benefit from the convergence of the cloud and local IT architecture.

Our offices will be closed Monday in observance of Labor Day.

*The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Clients or prospective clients should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All clients are strongly urged to consult with their tax advisors regarding any potential investment. Past performance does not guarantee future results; there is always a possibility of loss.

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Ulland Investment Advisors

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