December 16, 2019

The Week On Wall Street

The U.S. and China announced a limited trade agreement last week. That news lifted U.S. and foreign stocks, leading to weekly gains.

Advancing 0.91% on the week, the Nasdaq Composite outperformed the S&P 500 (up 0.73%) and Dow Jones Industrial Average (up 0.43%). The MSCI EAFE index, measuring the performance of developed markets overseas, improved 0.42%.1,2

Phase-One Trade Deal Reached, December Tariffs Averted

Friday, White House and Chinese officials confirmed an agreement on what has been characterized as an initial step toward a larger trade pact. As a result of this phase-one deal, new U.S. tariffs (slated to go into effect on December 15) were canceled. The 15% tariffs (imposed on $110 billion of Chinese goods in September) now fall to 7.5%.

In return, China has committed to buying greater quantities of American crops, factory goods, and energy products.3 

Fed Holds Steady On Short-Term Interest Rates

The last Federal Reserve meeting of the year brought no adjustment for the federal funds rate. The vote to leave short-term rates unchanged was unanimous.

After the meeting, Fed chair Jerome Powell told the media, “as long as incoming information about the economy remains broadly consistent with [our] outlook, the current stance of monetary policy will likely remain appropriate.” 4

Retail Sales Disappoint

Economists, surveyed by Bloomberg, expected a retail sales gain of 0.5% for November, but according to the Department of Commerce, the advance was only 0.2%. In a bright spot for analysts who wanted to see a strong start to the holiday shopping season, sales at online retailers rose 0.8% last month.5

The Week Ahead: Key Economic Data

  • Tuesday: The Census Bureau offers a snapshot of November residential construction activity.
  • Thursday: A look at November existing home sales from the National Association of Realtors.
  • Friday: November personal spending data and the third estimate of third-quarter economic expansion from the federal government, plus the year’s final University of Michigan Consumer Sentiment Index (which measures consumer confidence levels).

The Week Ahead: Companies Reporting Earnings

  • Tuesday: FedEx (FDX)
  • Wednesday: General Mills (GIS), Micron Technologies (MU), Paychex (PAYX)
  • Thursday: Accenture (ACN), Nike (NKE)
  • Friday: CarMax (KMX)
Market Index Close Dec 13 Week % YTD %
DJIA 28,135.38 +0.43 +20.61
NASDAQ 8,734.88 +0.91 +31.64
S&P 500 3,168.80 +0.73 +26.41
Treasury Close Dec 13  Week % YTD %
10 Year Note 1.82% -0.02 -0.87

Sources: wsj.com, treasury.gov – 12/13/19
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. Weekly and year-to-date market index returns are expressed as percentages. 10-year Treasury note yield = projected return on investment, expressed as a percentage, on the U.S. government’s 10-year bond. Weekly and year-to-date 10-year Treasury note yield differences are expressed in basis points.

Weekly Tip

When you schedule home repairs or home improvements, double-check that the contractor you hire is licensed, fully bonded, and insured. If that is not the case, you could be assuming unnecessary risk during their visit.


Citations
  1. wsj.com/market-data
  2. quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices
  3. marketwatch.com/story/trump-announces-phase-one-china-trade-deal-and-scraps-dec-15-tariffs-2019-12-13
  4. bloomberg.com/news/articles/2019-12-11/fed-leaves-rates-unchanged-and-forecasts-show-no-change-in-2020
  5. bloomberg.com/news/articles/2019-12-13/u-s-retail-sales-miss-forecasts-for-pickup-as-restaurants-drop

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