Market Update: Friday, January 19, 2018


Market Recap

  • Major domestic indexes finished lower. Lack of clear economic drivers behind decline, but potential for government shutdown cited as possible catalyst; Dow -0.4%, S&P 500 Index -0.2%, Nasdaq flat.
  • Telecommunications and technology outperformed. Utilities and energy–despite oil continuing to hold above the $60/bbl. mark–lagged.
  • Negative market breadth (NYSE 2.6:1, Nasdaq 1.7:1), volume remained above average (~117% of 30-day avg.).
  • Treasury yields trekked higher; 10-yr. yield +3 basis points (+0.03%) to 2.62%.
  • Commodities: WTI crude oil held near flat (-0.3% to $63.79/bbl.), COMEX gold softened -0.9% to $1327/oz., industrial metals finished mixed.
  • Economic data: Crude oil inventories posted its ninth weekly drawdown; pace of drawdown increased from -4.9 million barrels to -6.9 million barrels week over week.

Overnight & This Morning

  • Stocks open higher despite rising concerns over potential government shutdown. House passed stopgap bill Thursday night, but Senate hurdles remain.
  • Europe heading towards third weekly gain ahead of German vote on Sunday to decide whether coalition talks between Social Democratic Party, Chancellor Merkel’s conservative party will progress. STOXX Europe 600 +0.5%, DAX +1.0%, CAC 40 +0.5%.
  • Asia capped off strong week with more gains; upbeat economic data out of China on Thursday remained a tailwind. Shanghai Composite +0.4%, Hang Seng +0.4%, Nikkei +0.2%.
  • Treasury yields firm with 10-yr. note holding near 2.62%.
  • Commodities: oil -1.3% to ~$63/bbl., gold +0.6% to ~$1334/oz., industrial metals mixed.
  • Economic calendar is light today with the University of Michigan Sentiment (94.4) coming in below consensus (97.0) and prior reading (95.9).


Macro Notes

  • Government shutdown possible, but will it matter for markets? The last stopgap spending bill was passed on December 21, 2017, and extended funding for the Federal government until today, January 19, 2018. The House of Representatives passed another short-term funding measure last night, which would fund the government through February 16, 2018. However, support is more questionable in the Senate, which will continue to debate the bill today. A last minute deal to avoid a shutdown could still happen, but even if it doesn’t, the good news for investors is that government shutdowns have historically been a non-event for markets, as outlined in our recent blog. However, that won’t stop the ongoing conversations from generating headlines.
  • Is Strong Builder Sentiment Bullish or Bearish for the Industry? The latest data on the National Association of Home Builders Market Index remained near multi-decade highs. Is this bullish sentiment reading telling of strong momentum and continued growth for the industry? Or, is it an extreme contrarian condition which increases the likelihood for a trend reversal? Today on the LPL Research blog, we investigate.


Click Here for our detailed Weekly Economic Calendar


  • U. of Michigan Sentiment (Jan)

Past performance is no guarantee of future results.

The economic forecasts set forth in the presentation may not develop as predicted.

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

Stock investing involves risk including loss of principal.

Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, political risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks.

Because of its narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.

Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments.

Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.

Investing in foreign and emerging markets debt securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical and regulatory risk, and risk associated with varying settlement standards.

Currency risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged.

This research material has been prepared by LPL Financial LLC.

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.

Not FDIC/NCUA Insured | Not Bank/Credit Union Guaranteed | May Lose Value | Not Guaranteed by any Government Agency | Not a Bank/Credit Union Deposit

Securities and Advisory services offered through LPL Financial LLC, a Registered Investment Advisor

For Client Use – Tracking # 1-689859 (Exp. 1/19)