Markets Slide on Sharp Decline in Tech Stocks; Bonds Flat

Good morning,

The Dow (-1.2%), NASDAQ (-3.0%), and S&P 500 (-1.6%) all fell sharply last week.  Meanwhile taxable bonds and tax-free municipal bonds gained less than 0.1% for the week.  The 10-year Treasury yield remained unchanged at 4.09%.

Technology stocks fell over 4%, leading the markets lower for the week.  Specifically, the Artificial Intelligence (AI) related companies fell sharply, including energy companies in the nuclear power industry.  There were no economic news or data to support it, so many pundits believe that it was a result of profit taking.  As for economic news, there was little data reported, as the government shutdown reached its longest duration in history.  In non-governmental reports, the Institute of Supply Managers (ISM) sentiment surveys revealed a slight drop in manufacturing, but a healthy gain in services.  The ADP employment report showed a gain of 42,000 jobs in October, compared to a projected loss of 29,000 jobs for the month.

As of late last night, it appears that Congress has (finally) agreed upon a bill that would end the government shutdown.  However, this didn’t happen soon enough to prevent thousands of airline flights from being canceled, which will inevitably have some economic impact, not to mention the inconvenience to many business and personal travelers.  Fortunately, the government workers can return to work and, more importantly, be paid back to October 1.  The markets seem to be enthusiastic about the agreement, as markets are set to open up sharply this morning.

Have a great day and terrific week.

^{Source:  Yahoo Finance}

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^{The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.}