Stocks rallied to new record highs this week – more than making up for last week’s decline – following Hurricane Irma’s weaker-than-expected Florida landfall and ahead of next week’s FOMC meeting. The Dow led this week’s advance, climbing 2.2%, followed by the S&P 500 (+1.6%), and then the Nasdaq (+1.4%). For the year, the S&P 500 now holds a gain of 11.7%.
The bulk of this week’s gain came right off the bat as investors happily dialed back their estimates on Monday for damages related to Hurricane Irma, which quickly petered out after hitting the Florida Keys on Sunday. Insurers led the Monday rally, underpinned by the prospect of fewer-than-expected hurricane related claims.
Equities followed up their stellar Monday performance with another win on Tuesday, but conviction was much more modest. Apple (AAPL) held its annual product event, in which the company unveiled a trio of iPhones, including the iPhone 8, the iPhone 8 Plus, and the high-end iPhone X – which CEO Tim Cook called “the biggest leap forward since the original iPhone.”
On the whole, Tuesday’s product event provided little new information as many of the details had been leaked beforehand. Apple sold off immediately following the event, with some investors citing concerns related to the iPhone X’s later-than-expected release date.
Following Tuesday’s modest victory, which sent all three major U.S. indices to new record highs, the stock market took a breather, ending the week in a sideways trend.
Investors largely ignored North Korea’s latest missile launch, which flew over northern Japan on Friday morning, continuing the week’s safe-haven sell off. After hitting a 10-month low last week, the yield on the benchmark 10-yr Treasury note climbed 14 basis points this week, settling at 2.20%. Meanwhile, the 2-yr yield climbed 13 basis points to finish at 1.38%.
A hotter-than-expected August CPI (inflation) reading, which showed a year-over-year increase of 1.9%, prompted an adjustment in rate-hike expectations. According to the CME FedWatch Tool, investors currently place the chances of a December rate hike at 57.8%, up from last week’s 31.0%.
Source: Briefing Investor
Mike Minter
