Another week of stock market volatility rocked the markets as the S&P 500 approached correction territory again this year – a term used when a stock or index is 10% below its high. While many of the economic indicators are still positive, with a third quarter initial estimate of GDP growth at 3.5%, valuation levels have pulled back to reflect that corporate earnings growth may be harder to generate over the next couple of years. Expectations that a Trump-Xi summit would resolve the trade tensions with China waned, as the White House signaled trade talks would not move forward without addressing forced technology transfers. Adding to the unease were a series of pipe bombs mailed to top Democrats and CNN. Saudi Arabia continued to be under scrutiny regarding the unexplained murder of journalist Jamal Khashoggi.
U.S. large and small cap stocks ended the week with having erased nearly all of their gains year-to-date. Large companies like Amazon and Alphabet failed to meet revenue expectations and concern about global demand overshadowed reports from companies who beat earnings estimates, such as Microsoft and Twitter. International stocks followed suit and continued their dive into near bear market territory. China’s yuan moved to a 20-month low this week, and South Korean stocks dipped to their lowest level since last spring. Bond prices recovered some last week as the rising volatility caused funds to flow into safer assets.
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