Investment Commentary – September 10, 2019

Year to Date Market Indices as of Market Close September 10, 2019
• Dow 26,909 (15.36%)
• S&P 2,979 (18.85%)
• NASDAQ 8,084 (21.84%)
• Gold $1,493 (16.98%)
• Oil $57.87 (26.33%)
• Barclay Bond Aggregate (8.58%)
• All World Index (14.33%)
• Fed Funds Rate 2.25 (-0.25 rate cut 7/31/19)
• US Real GDP Growth 2.0 Q2/2019 (Down from 3.1 in Q1)

Dow notches fifth straight gain as investors eye potential change in leadership

U.S. stocks closed at session highs Tuesday as a rally in energy, industrials and materials stocks overshadowed a selloff in momentum-driven technology shares, helping the Dow extend its win streak to five sessions and the S&P 500 index avoid consecutive declines after trading in the red for most of the session.

Apple Inc. AAPL, +0.32% was in the spotlight as it announced new model iPhones and other products at its annual launch event Tuesday afternoon.

How did the major benchmarks fare?

The Dow Jones Industrial Average DJIA, +0.28% rose 73.92 points, or 0.3%, to 26,909.43, while the S&P 500 index SPX, +0.03% added 0.96 point, or less than 0.1%, to 2,979.39. The Nasdaq Composite index COMP, -0.04% retreated 3.28 points, or less than 0.1%, to 8,084.15

At session lows, the Dow fell 118.46 points, or 0.4%, the S&P 500 lost 21.42 points, or 0.7% and the NASDAQ was down 85.75 points, or 1.1%.

What drove the market?

Investors eyed a potential rotation in market leadership from defensive names and fast-growing tech stocks into cyclical sectors, including energy, industrials and materials, all of which have posted gains Tuesday, in contrast with the S&P 500.

Apple drops price on new iPhone 11, undercuts Netflix and Disney on streaming

Apple Inc. tried to make cameras the focus of its iPhone launch event Tuesday, but the company’s most striking announcements concerned the prices of its phones and streaming offerings.

The first big surprise came when Apple AAPL, +0.29% revealed that it would charge $4.99 a month for its previously announced streaming video service, Apple TV+, which is now set to launch on Nov. 1. That price was lower than the $9.99 monthly fee that some analysts and reports had expected before the event, and it makes Apple’s offering cheaper than streaming services from Netflix Inc. NFLX, -0.13% and Walt Disney Co. DIS, +0.08% .

Live blog recap: Apple unveils new iPhone 11 models, $4.99 price for streaming services

The pricing announcement pressured shares of Netflix, Disney, and especially Roku Inc. ROKU, -0.67%, which saw its stock fall more than 10% in Tuesday trading. Apple shares ended the day up 1.2%.

Around the web

Recovery path: U.S. stocks maintained the previous week’s positive momentum, regaining more of the ground lost in a four-week string of declines. With the latest week’s gain of nearly 2%, the S&P 500 was within 2% of its record high set in late July.

Talking again: While neither side retreated from recent tariff increases, U.S. and Chinese officials on Wednesday confirmed plans to hold more high-level trade negotiations in early October. Leading up to those talks, mid-level officials plan to discuss details to lay the groundwork for the broader discussion, which will be held in Washington.

Q2 earnings review: Data on the recently concluded earnings season confirms that profits decreased for the second consecutive quarter. Earnings for companies in the S&P 500 slipped 0.4% relative to the same quarter a year earlier, according to FactSet. On the positive side, 75% of companies exceeded analysts’ earnings expectations.

Upcoming this week:
Friday: Retail sales, U.S. Census Bureau, Export and import prices, U.S. Bureau of Labor Statistics

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.