Weekly market update
The major averages finished mixed last week as traders and investors attempted to interpret mixed signals on trade from Washington and Beijing. The Dow slipped 0.06%, the S&P 500 rose 0.21% and the NASDAQ finished lower by 0.08%.
The week began with an apparent escalation of tensions—the President shocked the markets by saying that maybe it was better to wait until after the 2020 election to get a deal—which was O so close just days before but ended with signs of progress towards a deal—so pretty much what we have been dealing with for well over a year. China insists that tariffs must be rolled back before any deal takes place.
We have been doubtful of any deal with China as the two sides can’t even get an agreement to go back to the way things were prior to the trade war’s beginning. And something that is a new twist, the violence in Hong Kong is now becoming a sticky subject, that wasn’t even on the radar when the trade war/tensions began.
It’s not just China anymore, now the President is wanting to hit Brazil and Argentina with a new round of steel tariffs and he is also threatening European luxury names for tariffs on things such as champagne and handbags—think Louis Vuitton, Hermes and Christian Dior.
Turning to the economy, manufacturing data from two different sources couldn’t have laid out a more opposite view. First, the November PMI manufacturing data showed activity at a seven-month high, and then shortly after that report, the ISM manufacturing index came in contraction territory for the fourth straight month.
We got the latest jobs report and it showed the economy added 266,000 jobs in November, blowing past expectations, and the unemployment rate fell to 3.5%—the lowest in 50 years. Wages grew at 3.1%, a bit better than last month but still not as high as one would expect given the record low unemployment figures. And jobless claims keep going down—the only people not working are those who choose not to do so.
This week we have the FED’s December meeting and they have told us that rate decreases are on hold, but it will be what they say about the future of rate increases/decreases. We will also get the latest read on inflation with CPI and PPI and we also get the latest retail sales figures. Speaking of retail sales, Amazon said Cyber Monday 2019 was the single best shopping day in the company’s history.
One final thing on the radar, December 15th is the deadline for more tariffs to be slapped on China, so we will watch to see if the President holds off on those new tariffs or goes ahead as planned.
Stay tuned and we will keep you posted.
Todd Day, MBA
Portfolio Manager
Horizon Financial Services, LLC