This week in the markets
- Major US stock indexes saw a small rebound Thursday before decreasing again midday Friday.
- Oil prices dropped 4% on Tuesday after news of excessive supply, but prices stabilized in the following days.
- Single-family home sales have slowed by nearly 13% since last year, possibly due to increased mortgage rates.
The stock market had a roller coaster week
It was a brutal week for investors, with the Dow Jones Industrial Average (DJIA) and the Standard & Poor's 500 Index (S&P 500) officially erasing all gains from 2018. However, Thursday brought some much-needed relief, with an increase in most major stock indexes. The DJIA rose 1.6%, the S&P 500 was up nearly 2%, and the Nasdaq bounced back 2.95% at Thursday's close. Strong quarterly earnings reports from major companies like Microsoft, Visa, Comcast, and Ford may have helped drive the markets higher. Tesla’s stock price also jumped over 8% after its third-quarter earnings report boasted the company's most significant profits ever.
Friday started off with yet another wild drop, with the DJIA falling 2%, the S&P 500 declining 2.8%, and the Nasdaq plunging 3.5%. The decline in the markets may be due to weaker earnings reports from Amazon, Caterpillar Inc., and Alphabet Inc. which caused unrest among some investors. During the past couple of weeks, the markets have seen significant volatility with the S&P 500 decreasing by as much as 13% from its September highs.
As MoneyLion investors, it's essential to take market volatility in stride. Short-term losses can be unsettling, but markets tend to recover and keep growing. This week has been a perfect example of how unpredictable the markets can be and why it’s important to focus on your long-term goals.
Volatility reached oil prices as well this week
Oil prices fell 4% to a two-month low on Tuesday, possibly due to concerns over excessive supply in the coming months. Investor concerns were probably sparked, at least partially, from Saudi Arabia’s pledge to meet any supply shortfalls. Prices of commodities, like oil, are often based on supply and demand. When a specific commodity is abundant, it may push prices down. Oil prices seemed to stabilize on Thursday, following the rebound in the US stock market. The price swings we see in commodities are another symptom of volatility in the markets.
Housing market slump could be good for home buyers
Sales of new US single-family homes fell 13% since September of 2017, possibly due to higher housing costs and rising mortgage rates. Mortgage rates have been slowly rising, with the most recent average being 4.87%. Last month represented the worst month in single-family home sales since December of 2016.
Reduced home sales could be beneficial if you're a first-time homebuyer in search of a new home, although those who own homes already may not be feeling the same excitement. As sales drop and supply increases, the price of new homes may also drop. Just another lesson on supply and demand.
And now for your weekly Lionomics wrap-up. 🤓
Lionomics: Finance made easy
This week's Lionomics lesson covered the many varieties of bonds. We discussed the pros and cons of the four main bond types, and how it may be beneficial to use mutual funds and exchange-traded funds (ETFs) to easily diversify among different kinds of bonds.
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