The Week in Charts
Market Recap
Large-Cap Markets Eke Out Gains Amid Geopolitical Tensions and Labor Unrest
U.S. large-cap equity indices managed to close the week with slight gains, marking their fourth consecutive weekly increase. This positive outcome came despite heightened geopolitical tensions and labor unrest.
The Dow Jones Industrial Average (DJIA), S&P 500, and NASDAQ all recorded modest weekly gains of less than 0.2%, while the smaller-cap Russell 2000 experienced a minor setback, declining by 0.2%.
Geopolitical Concerns and Market Volatility
The week began on a tense note as Iran launched a ballistic missile attack against Israel, raising fears of an escalating conflict in the Middle East.
This geopolitical shock sent oil prices soaring to multi-month highs and weighed heavily on investor sentiment.
Consequently, the S&P 500 Index dropped 1.38% by Monday’s close as investors grappled with potential implications for global energy supplies and overall market stability.
Labor Unrest and Supply Chain Concerns
Market uncertainty was further compounded on Tuesday when the International Longshoremen’s Association initiated a walkout, effectively halting operations at major ports along the East and Gulf Coasts.
These ports handle nearly half of all U.S. trade volume, sparking immediate concerns about supply chain disruptions and inflationary pressures.
However, a temporary agreement deferring major labor action until mid-January helped alleviate some of these worries.
Employment Report Fuels Friday Rally
Source: MarketWatch
The week’s turning point came on Friday with the release of the Employment Situation Report. The report revealed a stronger-than-anticipated increase in nonfarm payrolls, adding 254,000 jobs compared to the consensus estimate of 150,000.
This positive data fueled a market rally, as investors interpreted it as a sign of potential economic resilience without triggering aggressive Federal Reserve rate hikes.
Manufacturing Sector Update
The U.S. Census Bureau’s August report on manufacturers’ shipments, inventories, and orders showed a slight decline in new orders for manufactured goods. Orders decreased by $1.3 billion or 0.2% to $590.4 billion, marking the third decrease in four months.
Shipments also fell by $3.1 billion or 0.5% to $590.1 billion, while unfilled orders increased by $5.0 billion or 0.4% to $1,391.4 billion.
What’s Going On In Your Portfolio?
We continue to take profits from our value holdings and are reallocating towards growth, as opportunities present themselves. Volatility stops are still in place in case of a spike in volatility before the US Presidential election or caused by the Fed.
Bond portfolios continue to be fully invested in High-Yield bonds, which indicates that the market’s longer-term trend is still intact.
Upcoming Economic Data to Keep an Eye On
Source: Trading Economics
