Broker Check

The RFG Weekly Wealth Report

February 18, 2019

The Week on Wall Street 

The Week on Wall Street Stocks ended a good week on a high note, as hints of progress in U.S.-China trade talks encouraged investors.When the closing bell rang Friday, the S&P 500 settled at 2,775.60, after rising 2.50% in five days. The Dow Industrials gained 3.09%, to close Friday at 25,883.25. The Nasdaq Composite improved 2.39% to 7,472.41.    

FACT OF THE WEEK

Playing cards date back to somewhere between A.D. 800 and A.D. 1100. There is reference to them in an ancient Chinese dictionary that said they were used to amuse and entertain kings and the people they lived with. In Egypt and India they were used for religious purposes.

MARKET MINUTE

Shutdown Averted Wall Street breathed a sigh of relief late last week as Congress passed a bill to keep the federal government funded. President Trump signed the measure on Friday.

The development is expected to have a positive effect on consumer sentiment, which may influence the financial markets. During the shutdown, consumer confidence hit an 18-month low.  

Retail Sales Unexpectedly Slip

Thursday, the Census Bureau announced that retail sales fell 1.2% in December. This was the largest monthly decline in more than nine years and fell short of expectations. Economists polled by Bloomberg anticipated a small gain.

Was the slow December mostly a reflection of consumer anxieties about the shutdown and the stock market? If so, it is possible that retail spending may see an uptick. (It should be noted that these monthly numbers are often revised later.) 

Inflation Holds Steady

The Consumer Price Index (CPI), the most widely followed measure of inflation, was flat in January for a third consecutive month. Year-over-year, overall inflation is running at just 1.6%.

The CPI is one of the key factors the Fed considers when assessing the economy and determining what lies ahead for interest rates. 

What's Ahead

U.S. and Chinese negotiators face a March 1 deadline to reach a deal to extend the current tariff truce. In March, tariffs on many Chinese imports could rise to 25% from 10%.    \

FINANCIAL STRATEGY OF THE WEEK

Should I invest in the company I just heard about?

Financial media, social media and online forums make it easy for investors to share portfolio ideas. Many researchers, though, believe such transparency contributes to a herd mentality in investing, as people opt to buy or sell based on how others are trading. The problem: Herd investing can lead to poor returns.

Sometimes, the questionable advice comes from the talking heads on financial media programs. In one recent study, researchers examined the stock prices of nearly 7,000 companies after their CEOs appeared on CNBC. They found that investors bought those stocks on the day of the interview, driving the prices up, only to see the prices drop in the ensuing trading days.

Before investing, make sure you have done your due diligence and are using a logical investment process instead of following emotional drivers.