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Market Recap Week Ending 5.3.19

-Darren Leavitt, CFA

Financial markets yielded mixed results last week as investors endured a choppy week of trading.  Q1 earnings reports continued to produce better than expected results.   Investors focused on solid results out of Apple and Amazon and had to contend with a shortfall in revenue from Google.  The Federal Reserve’s two-day meeting also played a role in last week’s market action along with the much anticipated Employment Situation Report.  The Fed left the Fed Funds rate unchanged at 2.25%-2.50%.

Investors seemed inclined to take some money off the table after the Fed statement and subsequent Q&A, as Chairman Powell took the possibility of a rate cut in 2019 out of the equation.  The Statement and commentary from the Chairman were all very consistent with the last couple statements and commentary- the Fed will continue to be patient and rely on the data to dictate policy.  The Employment Situation report came in much better than expected on Friday and sparked a nice rally.   Non-Farm Payrolls came in at 263K versus the consensus estimate of 210K while Average Hourly Earnings stayed subdued at 0.2%, slightly less than the 0.3% that had been expected.  The headline Unemployment rate came in at 3.6%, the lowest level since December of 1969.  The results portend a strong consumer as the US workforce continues to show strong results and bolster consumer confidence.

The S&P 500 and NASDAQ posted slight gains of 0.2%, while the Russell 2000 outperformed, gaining 1.4% on the week.  The Dow lost a bit of ground closing down 0.1%.  The US Treasury market trade was also quite choppy during the week and closed with a slightly flatter curve.  The 2-year yield gained 5 basis points on the week, closing with a yield of 2.32%.  The 10-year gained 2 basis points and closed with a yield of 2.53%.  Oil continued to come under pressure last week on further supply concerns and declined just over a dollar to close at $61.93 a barrel.  Gold also lost a bit of ground closing down $7.35 at 1281.35 an oz.  We had a number of changes to our models last week.  We sold out of positions in domestic and international real estate and out of our position in 7-10 year duration treasuries.  We added exposure to our current position in the S&P 500 and to our long duration bond position.  Additionally, we opened positions in European equities and Investment Grade Corporate paper.  Please let us know if you have any questions regarding the changes.

The information in this Market Commentary is for general informational and educational purposes only. Unless otherwise stated, all information and opinion contained in these materials were produced by Foundations Investment Advisers, LLC (“FIA”) and other publicly available sources believed to be accurate and reliable.  No representations are made by FIA or its affiliates as to the informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, FIA and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

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