John Hancock: Weekly Market Recap Week Ended October 26th

Hit from all sides

The negative factors for stocks were wide ranging in the latest week. Among the headwinds were disappointing earnings and revenue guidance from key technology companies, worries about further U.S.-China trade tariffs, continued economic weakness in China and Europe, anxiety over U.S. interest-rate hikes, and the aging of a bull market that’s almost 10 years old.

GDP strength

In a further sign that a recession is unlikely in the short term, the U.S. economy generated its strongest back-to-back quarters of GDP growth since 2014. The government’s initial estimate of third-quarter growth was 3.5%—down from the second quarter’s strong 4.2% pace, but slightly above most economists’ expectations.

Dollar dominance

The U.S. dollar on Thursday closed at its highest level since May 2017, relative to other major currencies. Meanwhile, China’s currency dropped to its weakest level in about a decade—a consequence of concerns about the health of China’s economy and the nation’s ability to endure escalating trade troubles with the United States.

Risk aversion

Prices rose for assets that are often perceived by investors as relatively safe compared with stocks. U.S. Treasury bond prices rose, sending the yield of the 10-year bond down to 3.07%, the lowest in nearly 4 weeks, and gold prices climbed. In addition, net flows into U.S. money market funds climbed in the third quarter to the highest level in 4 years, according to Morningstar.

Source: https://wmr.jhinvestments.com