Led by Technology, Stocks Finish the Week Higher Despite Geopolitical Concerns
Sources: Sources for data in tables: Equity Market and Fixed Income returns are from JP Morgan as of 04/13/18. Rates and Economic Calendar Data from Bloomberg as of 04/17/18. International developed markets measured by the MSCI EAFE Index, emerging markets measured by the MSCI EM Index. Sector performance is measured using GICS methodology.
The major indices experienced gains last week, but periods of intermittent volatility persisted. Investors were seemingly comforted by the prospects of strong first-quarter earnings reports. Concerns with global trade negotiations and certain technology stocks also began to ease. As a result, the Dow Jones Industrial Average advanced 1.8%, the S&P 500 Index gained 2.04% and the heavily tech weighted Nasdaq Composite Index led the major indices with a gain of 2.77% for the week.
Some fears that the U.S. and China were heading towards a retaliatory trade war were diminished after a series of interviews with White House officials and a speech from Chinese President Xi Jinping regarding intellectual property rights of foreign firms, reduced duties on imported goods and plans to largely cut tariffs on imported automobiles.
Also on the international front, geopolitical tensions were heightened following a chemical attack from the Syrian government on a rebel-held town, leading the U.S. to suggest that retaliatory military options were under consideration. Russia, which is an ally to Syria and generally supports Syrian President Bashar al-Assad, stated they would shoot down any missiles that the U.S. might fire at Syria. Due to these dual threats, traders pushed oil prices higher, following the belief that a potential slowdown in production could be forthcoming. Accordingly, the S&P 500 energy sector gained 6.0% by the end of last week. (It should be noted that the U.S. did ultimately fire missiles at certain defined targets in Syria on Friday, April 13, 2018).
Back on domestic grounds, Facebook’s CEO Mark Zuckerberg testified on Capitol Hill regarding the data scandal plaguing the company. While it is unclear at this time what the effect of his testimony will have on Facebook, or its stock, Facebook shares climbed 4.7% by the end of the week, helping the tech-heavy Nasdaq Composite finish higher than the two other major U.S. indices cited above.
Despite the length of this current secular bull market, we still see additional upside growth potential for global stocks due in large part to a solidifying global economic foundation. This does not, however, diminish the potential for additional short term bouts of volatility. It remains critical, in our view, that investors revisit their portfolio strategies to help ensure that they have diversification in place to help navigate through these periods of heightened portfolio. If you would like to learn more about how we are helping clients managing volatility in accordance with their own investment goals, timeframe and tolerance for risk, please do not hesitate to speak with your Hennion & Walsh Financial Advisor.
Disclosures: Past performance does not guarantee future results. We have taken this information from sources that we believe to be reliable and accurate. Hennion & Walsh cannot guarantee the accuracy of said information and cannot be held liable. This information is provided for informational purposes only and is not a solicitation to buy or sell any of the asset classes or sectors discussed.
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