Market Update: Wednesday, October 17, 2018

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Daily Insights

  • New LPL Market Signals Podcast. On the latest episode of the LPL Market Signals Podcast, listen to LPL Financial Chief Investment Strategist John Lynch and Senior Market Strategist Ryan Detrick discuss signs for strong third-quarter earnings and a potential year-end rally following the stock drop.

  • Stocks’ big day. Investors’ risk appetites resurged yesterday after a sharp equity selloff last week. The S&P 500 Index, Nasdaq and Dow all posted their biggest one-day gains since March, while the Russell 2000 jumped the most since November 2016. Breadth in yesterday’s gains was also unusually strong. The NYSE Advancers/Decliners gauge, or the ratio of increasing NYSE stocks to decreasing NYSE stocks, was the highest since July 2016. The S&P 500 is taking a breather this morning, declining modestly in early trading after yesterday’s strength.

  • Industrial production up fourth straight month. The seasonally-adjusted 0.3% growth month over month was below August’s unrevised 0.4% figure but above analysts’ expectations for a 0.2% increase. An increase in mining sector activity-which includes WTI crude oil and natural gas extraction-which has been trending up with oil prices since 2015, helped U.S. industry output increase for a fourth straight month in September. Manufacturing output, the largest component of the index, continued to expand last month also rose for a fourth straight month.

  • Data indicate housing market remains healthy. Yesterday’s better-than-expected NAHB Housing Market Index was offset somewhat this morning by building permits and housing starts data from September that came in modestly below analyst forecasts and prior month figures. Similar to Monday’s retail sales, Hurricane Florence is credited with disrupting activity in the Southeast, which accounts for about half of starts and fell 13.7% from the prior month; expect Hurricane Michael to impact next month’s report. On the positive side, permits for single-family homes were up 2.9% month over month, the biggest gain in a year, suggesting builders have a steady pipeline that could contribute to growth in the fourth quarter as consumer demand, helped by a solid job market and lower taxes, as well as post-storm rebuilding, overshadows headwinds including rising mortgage rates and property prices.

  • Missing the worst (and) best days in the market. After more than three months without a single 1% change (up or down) for the S&P 500, volatility came back — and in a big way — this past week. What would happen if you could avoid all the big down days for stocks while invested in a portfolio mimicking the makeup of the S&P 500? We’ll take a look later today on the LPL Research blog.

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Wednesday

Thursday

Friday

  • Existing Home Sales (Sept)
  • Baker Hughes U.S. Rig Count (Oct)


IMPORTANT DISCLOSURES

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Index data obtained via FactSet

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