“The Good & The Bad” – Vista Partners Daily Market Recap 12/3/2018
The good news is that stocks rallied on Monday as investors optimistic about reduced trade tensions with China after President Trump announced a 90-day cease fire in the trade war as negotiations continue. S&P 500 ended the session up 1.09% and the Nasdaq rose 1.51%. The Dow closed out the day with gains of 1.13%.
Most individual components of the Dow did well today, although some did dip into the red. Of those companies with losses, Verizon (VZ) had the most significant as it tumbled 3.55%. Boeing (BA) led the day with gains, rising 3.81%, and NIKE (NKE) wasn’t far behind with an increase of 3.75%
Atossa Genetics (ATOS) had a VERY good day as it saw shares spike 21.05% into the close on over 16.8 million shares of trading after hitting intraday highs that pushed the stock up over 50% at times. Note that ATOS is a Seattle based clinical-stage biopharmaceutical company developing novel therapeutics and delivery methods to treat breast cancer and other breast conditions. The action in ATOS surfaced after the they announced that the FDA had approved an “expanded access” of Atossa’s proprietary oral Endoxifen in the preoperative setting in a U.S. patient awaiting surgery for breast cancer.
The bad news for the markets today though, came from an ominous sign in the bond market. For the first time since 2007, there was an inversion in Treasury yields. This inversion is a tell-tale sign that the market is typically headed toward recession and that there is a greater risk of the government defaulting.
While the major inversion that analysts look for to herald a recession is between the 2-year and 10-year yields, today’s was between the 3-year and 5-year yields.
Ian Lyngen, with BMO Captial Markets, stated that today’s inversion gives him even more reason to believe that there will be an inversion of the 2-year and 10-year yields late this year or in the early part of next year. According to Lyngen, “This solidifies not only my flattening bias but I think it will lead many players in the market who [expected the yield curve to steepen] to capitulate on that.”
Another negative sign came as U.S. construction spending was reported to have decreased by 0.1% in October. This is the 3rd consecutive month of decreases for construction spending in the U.S.
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