1-760-771-3339

In this week’s recap: stocks slump as the 10-year Treasury yield spikes, an ISM index hits a historic peak, job creation weakens, and oil extends its winning streak.

10-YEAR TREASURY YIELD HITS A 7-YEAR PEAK

Friday, the yield on the 10-year note reached 3.23%, its highest level since 2011. Its yield rose dramatically last week, influenced by hawkish comments from Federal Reserve chair Jerome Powell and reports showing minimal unemployment and a swiftly expanding business sector. All this strengthened investor perception that the U.S. economy has hit its stride. It also suggested a near future with recurring interest rate hikes, costlier borrowing, and subdued spending. That possibility weighed on equities. For the week, the Nasdaq Composite fell 3.21% to 7,788.45, and the S&P 500, 0.97% to 2,885.57; the Dow Industrials retreated just 0.04% to 26,447.05.1,2

LESS HIRING IN SEPTEMBER

A look at the Department of Labor’s latest jobs report reveals good news and bad news. The good news? Unemployment declined further to 3.7%, annualized wage growth improved to 3.4% in the third quarter, and monthly net hiring averaged 190,000 in Q3. The bad news? Payrolls expanded with just 134,000 net new jobs last month, as underemployment ticked up 0.1% to 7.5% and year-over-year wage growth slowed to 2.8%. Some economists feel that Hurricane Florence significantly impacted the September data.3

SERVICE SECTOR EXPANDS AT A HISTORIC PACE

The Institute for Supply Management said its non-manufacturing purchasing manager index rose 3.1 points in September to 61.6. It has never been that high in its decade-long history. ISM’s PMI for the factory sector took a slight dip in September, slipping from 61.3 to 59.8 but still showing fast expansion.4

OIL MAKES ANOTHER WEEKLY ADVANCE

Crude is on a 4-week winning streak. At Friday’s closing bell, the price stood at $74.34 a barrel on the NYMEX, reflecting a 1.5% rise in five days. Again, worries over upcoming U.S. sanctions against Iran helped to send prices higher. WTI crude settled at $76.41 Wednesday, which approached a 4-year peak for the commodity.5

TIP OF THE WEEK

Yes, clipping coupons can save you money at the grocery store – but keep in mind, coupon deals may lead you to buy unneeded items. The cost of the extra purchases could cancel out any coupon savings.

THIS WEEK

While the U.S. bond market is closed Monday in observance of Columbus Day, U.S. stock exchanges are open for business; no major economic or earnings releases are scheduled. | Nothing major is slated for Tuesday, either. | Wednesday, investors consider the September Producer Price Index and earnings from Fastenal. | On Thursday, the September Consumer Price Index appears, along with the latest initial jobless claims report and earnings news from Delta Air Lines and Walgreens Boots Alliance. | The fall earnings season begins Friday, with announcements from Citigroup, JPMorgan Chase, PNC Financial Services Group, and Wells Fargo; in addition, the University of Michigan’s preliminary October consumer sentiment index arrives.

QUOTE OF THE WEEK

“Success is the maximum utilization of the ability that you have.” – Zig Ziglar

% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA 6.99 16.12 15.09 16.57
NASDAQ 12.82 18.27 20.91 31.81
S&P 500 7.93 13.07 14.14 17.30
         
REAL YIELD 10/5 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 1.07 0.49 0.46 2.21

Sources: wsj.com, bigcharts.com, treasury.gov – 10/5/182,6,7,8

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

THE WEEKLY RIDDLE

They can pass through state after state, all while never moving. What are they?

LAST WEEK’S RIDDLE

What can be broken, but should not be forgotten?

ANSWER

A promise.

Greg R. Solis, AIF®
President and CEO
Bob Medler, CRPC®, CMFC®, AIF®
Wealth Advisor / Investment Analyst
 
78-075 Main Street
Suite 204
La Quinta, CA 92253
Office: (760) 771-3339
Fax: (760) 771-3181

www.soliswealth.com
E-Mail: greg@soliswealth.com
E-Mail: bob@soliswealth.com
CA Insurance License #0795867 & 0C05523

The Wealth Advisors of Solis Wealth Management are also Registered Representatives with and securities and advisory services are offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC

The information contained in this email message is being transmitted to and is intended for the use of only the individual(s) to whom it is addressed. If the reader of this message is not the intended recipient, you are hereby advised that any dissemination, distribution or copying of this message is strictly prohibited. If you have received this message in error, please immediately delete.

P.S. You have my permission to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.

Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

1 – thestreet.com/markets/stocks-rise-slightly-on-friday-after-september-jobs-report-14735092 [10/5/18]
2 – markets.wsj.com/us [10/5/18]
3 – bloomberg.com/news/articles/2018-10-05/u-s-payrolls-and-wages-cool-while-jobless-rate-hits-48-year-low [10/5/18]
4 – instituteforsupplymanagement.org/ISMReport/NonMfgROB.cfm?navItemNumber=30177 [9/26/18]
5 – marketwatch.com/story/us-oil-benchmark-ends-nearly-flat-but-tallies-a-4th-straight-weekly-rise-2018-10-05 [10/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F5%2F17&x=0&y=0 [10/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F5%2F17&x=0&y=0 [10/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F5%2F17&x=0&y=0 [10/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F4%2F13&x=0&y=0 [10/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F4%2F13&x=0&y=0 [10/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F4%2F13&x=0&y=0 [10/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F6%2F08&x=0&y=0 [10/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F6%2F08&x=0&y=0 [10/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F6%2F08&x=0&y=0 [10/5/18]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [10/5/18]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [10/5/18]