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Weekly Market Update for October 25, 2019

by JM Hanley

The Dow was up on Friday, rising 153 points to close at 26,958. For the week, the Dow was up 0.7% (SP500 +1.2%) and year-to-date is now up 15.6% (SP500 +20.6%). The yield on the 10-year Treasury (an important interest-rate indicator) rose five basis points, closing at 1.8%. The price of crude oil rose 5% this week to $57 a barrel – up 25% YTD.

News from the trade front was limited again this week. Rhetoric from both sides is by turns aggressive and conciliatory, but it’s reported that China will ask the US to suspend the tariffs scheduled to come into effect in December in exchange for additional purchases of US agricultural products. Economic data was a mixed bag. Existing home sales were lower than forecast, while building permits new home sales were about as expected.  Consumer confidence declined slightly. The Fed was quiet, but investors will take a break from earnings and tune in to the Fed’s meeting in the middle of next week.  It’s widely anticipated rates will be cut by another quarter of a point – but it’s uncertain what comes after that.

The week brought a heavy docket of third-quarter earnings reports.  Upgrading Prime members from two-day standard shipping to one day will take a toll on Amazon’s profits during the holiday season.  To develop the capacity for the move, the ecommerce behemoth needs to switch from using third party carriers to delivering most packages itself.  Ambitious bets have a history of paying off in Seattle, so Wall Street took the news better than it normally would have.

Results at Visa were better than expected, as was the firm’s outlook for growth over the next year. Visa’s ubiquity in worldwide spending makes it a useful barometer for the global economy as a whole. The fact that the payments network has seen no weakening over the past few months thus augurs well. According to management, China is one of the few regions facing headwinds, which would be consistent with other recent indicators.

Euronet Worldwide’s otherwise adequate results from managing ATMs were beset by a strong dollar and slowing remittances in the UK caused by the uncertainty surrounding Brexit. Granite Construction gave up much of the ground it had recently gained after a poor report. Three of the firm’s four businesses are doing passably well.  The fourth, which builds roads and other public works, lost money on an array of projects bid several years ago.  The firm has struggled to move beyond this expensive mistake.

Of the one-fourth of S&P 500 companies that have reported, about 80% have done better than expected. Shareholder profits, which had been expected to decline, have instead grown from last year. Next week will be equally busy. Facebook, Google, EA, Solaris, Apple, Alibaba, and Fidelity Information Services are all scheduled to report.

*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.