Weekly market update
The major averages all finished higher last week with the Dow climbing 0.49%, the S&P 500 rallying 0.77% and the NASDAQ up another 0.93%. The week didn’t start out so positive, but as you may guess, it was one tweet that turned the markets higher.
Tuesday, the major averages were sharply lower until we found out that the tariffs set to kick in this past Sunday were going to be delayed and the ones already imposed were going to be partially rolled back.
The S&P 500 found its 28th record high of 2019 on the back of renewed optimism around a phase one U.S./China trade deal. It seems trade deal news is the laser pointer on a wall, and the market is the cat. But, when it comes to the China trade deal; promises, even empty ones, count. Personally, I will believe it when the ink is dry on the paper.
The FOMC met for the final time last week for the year and the decade and they held their target interest rate steady and also presented a supportive economic backdrop, citing a healthy labor market, accommodative monetary policy and the lack of persistent inflation. They went on to say there would likely be no rate hikes in 2020, there would be one in 2021 and another one in 2022, unless something drastically changed.
For the European Central Bank (ECB), Christine Lagarde took over for Mario Draghi as the new President for the ECB and she held her first news conference as well. She noted increased confidence in the growth outlook but pointed to slow progress on inflation and signaled continuity on monetary policy.
Turning to the economy, we got the latest read on inflation and just as the FED said, we aren’t seeing any inflation. The CPI and the PPI both came in shy of expectations. We also got the latest read on U.S. small business sentiment and it jumped to the highest level in 18 months—recession—what recession.
The latest jobless claims number was a little concerning. The prior read was 203,000 initial claims and last week it spiked to 252,000. Although one week doesn’t make a trend, it is the highest read in 2 years, so something to certainly be watching.
Retail Sales were also a disappointment. They came in up 0.2% vs 0.5% as expected.
We got some good news on the housing market. Building permits hit their highest level since May 2007. Both housing starts and permits were up at double-digit pace from a year ago and industrial production was much better than anticipated.
This is the last full week of trading for the major averages this year and this decade and with some positive news on trade, we can go into the holidays feeling much better than we did one year ago. We will get the 3rd revision on GDP, we will get the final read on consumer sentiment and two regional FED reports—New York and Philly.
This will be the final market update for the year, so I want to wish you all a very Merry Christmas and a Happy New Year. Stay safe in your travels and we will keep you posted heading into 2020!
Todd Day, MBA
Portfolio Manager
Horizon Financial Services, LLC
