Investment Commentary – December 4, 2019

Year to Date Market Indices as of Market Close December 4, 2019
• Dow 27,701 (18.03%)
• S&P 3,114 (23.55%)
• NASDAQ 8,570 (28.60%)
• Gold $1,479 (15.12%)
• Oil $58.49 (27.70%)
• Barclay Bond Aggregate (8.79%)
• All World Index (20.13%)
• 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 rebound after report says trade deal can still be reached ahead of tariff increase

A phase one deal could still be done before the Dec. 15 tariffs go into effect.

Stocks opened higher Wednesday, and were on track to snap their three-day losing streak, after a Bloomberg report said a phase one deal could still be done before the Dec. 15 tariff deadline.

President Trump’s comments Tuesday, which downplayed the possibility of a trade deal being reached in the next couple of weeks and sent U.S. equity markets tumbling, were “off the cuff” and should not be taken as a sign that talks are at an impasse, according to the report, which cites people familiar with the matter.

Economic data out Wednesday morning showed private sector job growth slowed in November. The ADP Private National Employment Report showed private payrolls increased by 67,000 jobs last month, missing the 140,000 addition that was expected and down sharply from the 121,000 jobs added in October.

All three of the major averages opened higher with the Dow Jones Industrial Average up more than 130 points, or 0.5 percent in the opening minutes of trading. The S&P 500 and Nasdaq were higher by 0.3 percent and 0.4 percent, respectively.

Johnson & Johnson gained after the consumer-products maker said tests showed there was no asbestos in its baby powder.

GoPro shares rallied after announcing record Black Friday and Cyber Monday sales.

Expedia’s stock was higher Wednesday after the company announced its CEO and chief financial officer resigned.

On the earnings front, Campbell Soup cut its full-year sales forecast, but gained market share in soup for the first time in 10 quarters. Shares were higher.

West Texas Intermediate crude oil climbed ahead of a meeting on Thursday where OPEC and its allies are expected to extend production curbs. Meanwhile, gold was lower by 0.3 percent near $1,481 an ounce.

In Europe, London’s FTSE was down 1.7 percent, Germany’s DAX gained 1 percent and France’s CAC added 1.1 percent.

Asian markets were lower with Japan’s Nikkei down 1 percent, Hong Kong’s Hang Seng off 1.2 percent and the Shanghai Composite retreating 0.2 percent.

Around the web

Back on track: On the heels of a slightly negative week, the S&P 500 bounced back to record its seventh positive weekly result out of the past eight. The S&P 500 and the Dow gained around 1% and set new records in the holiday-shortened week; the NASDAQ added nearly 2%.

Homestretch momentum: November marked the fifth positive month out of the past six for the S&P 500, which rose steadily last month. The index posted an overall monthly return of 3.6%, and it entered the final month of 2019 with a year-to-date return of 27.6%.

Flagging confidence: A measure of U.S. consumer confidence fell for the fourth month in a row. However, analysts cautioned that the latest decline in The Conference Board’s monthly index doesn’t suggest that retail sales are likely to weaken over the holidays, and initial sales data from shopping on Black Friday were positive.

Trade watch: Incremental developments in the U.S.-China trade conflict continued to drive global markets during a mostly quiet week of trading. Stocks climbed on Monday after Chinese officials took steps to address U.S. concerns about intellectual property infringement. However, concerns about prospects for a trade deal rekindled after President Trump signed legislation supporting protesters in Hong Kong.

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.