John Hancock: Weekly Market Recap Week Ended October 19th
Volatility’s new normal?
After a six-month stretch of relative calm, market volatility remained elevated last week, with the Dow gaining nearly 548 points on Tuesday and losing 327 points on Thursday. Nevertheless, anxiety eased somewhat, as the Cboe Volatility Index’s high point was 21% below its peak of the previous week.
Earnings uplift
Quarterly earnings season is entering its busiest stretch, and results of the biggest U.S. companies to date have largely exceeded expectations. With more than 15% of the companies in the S&P 500 Index having reported third-quarter numbers so far, 83% have reported net income that topped analysts’ forecasts, according to FactSet.
Trouble in China
Much of the week’s turbulence in global markets originated in China, where state intervention in markets helped ease a sell-off on Friday. One source of pressure was the government’s announcement that China’s economic growth slowed to a 6.5% annual rate, the weakest pace since 2009. A Chinese equity index has dropped more than 20% year to date.
GDP ahead
The U.S. government’s initial estimate of third-quarter GDP is expected to be one of the week’s most closely watched economic reports. Economists expect that Friday’s report will show a slowdown in growth relative to the second quarter’s solid 4.2% annual rate.
Source: jhinvestments.com, John Hancock Investments