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Market Recap Week ending 8/16/19

-Darren Leavitt, CFA

A volatile week of trading entertained investors as uncertainty around trade, and an inverted yield curve stoked fears of an impending recession.  The major US equity indices ended the week with losses; however, steep losses incurred at the beginning of the week were somewhat recovered on the back of better than expected retail sales (reported 0.7% vs. consensus of 0.3%- the consumer still out spending) and on the announcement that some tariffs imposed on Chinese goods would be delayed until December.  Notably, the delay of tariffs were assigned to computers and cellphones, which in turn benefited technology component manufactures such as semiconductors.    Retailer, Walmart, also helped the cause with a better than expected earnings report.

The S&P 500 lost -1.03% on the week while the Dow gave up -1.53%, the NASDAQ lost -0.79%, and the Russell 2000 shed -1.28%.  Investors once again piled into US Treasuries which sent the 2-10 year spread into negative territory for the first time since 2007.  An inversion of the yield curve has in the past has been a harbinger of a recession, generally within 18 to 24 months after the initial inversion.  The 2-year note yield lost 16 basis points on the week and closed with a yield of 1.47%.  The 10-year bond yield ended the week at 1.54%, down 19 basis points.  Both Gold and Oil were little changed on the week closing at $1508 an Oz and $54.89 a barrel, respectively.   There were no changes to our models last week.

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