Weekly Market Commentary 10/19/2018

If, as the saying goes, the stock market tends to climb a “wall of worry” its uphill journey is getting more challenging by the week. For sure, there was no shortage of anxiety-producing events to knock it down a few notches this week. The scrum with Saudi Arabia over the alleged gruesome killing of a journalist grabbed most of the attention, although the economic and market impact via a potential oil disruption is not entirely clear. Still, the risk-off trade dominated market activity, reflecting ongoing trade tensions with China, where growth is slowing and facilitating sharp downward moves in the yuan and the Chinese stock market, a budding Italian debt crisis and, most prominently, rising interest rates. With the 10-year Treasury yield hovering around 3.20%, up from 2.4% at the start of 2018, the stock market with its high valuation and a dividend yield of under 1.9% on the S & P 500 Index is looking less compelling to investors.