Investment Commentary – December 17, 2019

Year to Date Market Indices as of Market Close December 17, 2019
• Dow 28,276 (21.18%)
• S&P 3,136 (27.35%)
• NASDAQ 8,823 (32.98%)
• Gold $1,480 (15.23%)
• Oil $60.88 (27.64%)
• Barclay Bond Aggregate (8.57%)
• All World Index (24.07%)
• Fed Funds Rate 1.75 (Three -0.25 rate cuts in 2019)
• US Real GDP Growth 2.1 Q3/2019 (Up from 2.0 in Q2)

Stocks drift higher for fourth straight day with S&P 500 heading for new record

U.S stock indexes edged higher again Tuesday, heading for a fourth consecutive day of gains, helped by supportive manufacturing and housing data and relief that an escalation in President Trump’s trade war with China was avoided by last Friday’s agreement.

What are major indexes doing?

The Dow Jones Industrial Average DJIA, +0.11% rose 56 points, or 0.2% to 28,291, while the S&P 500 index SPX, +0.03% gained 2 points, or less than 0.1%, trade at 3,193 and the Nasdaq Composite Index COMP, +0.10% gained 9 points, or 0.1%, at 8,823. The S&P 500 set a new intraday high early Tuesday.

On Monday, all three major indexes scored new record highs. The Dow rallied 100.51 points, or 0.4%, to end at 28,235.89, and the S&P 500 advanced 22.65 points, or 0.7%, to finish at 3,191.45. The Nasdaq Composite finished at 8,814.23, a gain of 79.35 points, or 0.9%.

What’s driving the market?

U.S. housing and industrial production data underscored that parts of the economy have accelerated in November. Home builders increased new construction at an annual pace of 1.365 million in November, an increase of 3.2% from October’s pace and above the 1.356 million expected by economists polled by MarketWatch.

Data on U.S. November industrial production and capacity utilization showed a 1.1% increase in November, the largest monthly increase in two years, after the end of the General Motors GM, +0.55% strike, but below the 1.2% rise expected by economists.

And job openings rose to 7.3 million in October from about 7 million in September, though below the 7.6 million openings last year. The rate at which Americans quit their jobs held steady at 2.3%.

Around the web:

Edging higher: U.S. stocks rallied on Thursday but were little changed the rest of the week, and the major indexes ended up with overall gains of slightly less than 1%. The results extended the market’s generally positive direction since early October—a trend that has sent indexes to new record highs.

Tariff rollback: A preliminary agreement announced on Friday between U.S. and Chinese trade negotiators includes a withdrawal of new U.S. tariffs that had been scheduled to take effect on Sunday, December 15. China will also remove tariffs, and rates on an earlier round of U.S. tariffs will drop from 15.0% to 7.5%—not as much as many observers had expected.

Steady Fed: The board of the U.S. Federal Reserve unanimously agreed to keep interest rates unchanged, and projections indicate that most members expect to leave rates at current levels through 2020, absent any big shifts in their currently favorable economic outlook.

Brexit boost
The Conservative Party of Prime Minister Boris Johnson scored a decisive victory in Thursday’s U.K. election—an outcome that’s expected to clear the way for the nation to proceed with its long-delayed Brexit divorce from the European Union. A British stock index and the pound surged on Friday.

Upcoming this week:
Friday: Third-Quarter GDP, third estimate

The views presented are not intended to be relied on as a forecast, research or investment advice and are the opinions of the sources cited and are subject to change based on subsequent developments. They are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investments.