New record highs for S&P 500, Dow and NASDAQ
Market Recap Week ending 11/15/2019
US equity markets continued their ascent last week with new record highs being set once again for the S&P 500, Dow, and NASDAQ. The S&P 500 and Dow broke above the 3,100 and 28,000 marks, respectively, for the first time too. For the week the S&P 500 gained 0.89%, the Dow rose 1.17%, the NASDAQ tacked on 0.77%, and the Small-cap focused Russell 2000 lagged with a decline of -0.15%. US Treasuries also advanced last week. The 2-year note yield declined by five basis points to close at 1.61% while the 10-year bond yield fell by ten basis points to close at 1.83%. Gold was essentially flat for the week, closing up a fraction at $1468.50 an Oz. Oil advanced to gaining 0.9% to close at $57.75 a barrel. Our tactical models had a couple of changes last week. We have decided to move out of our consumer discretionary position and use those proceeds to increase our position in the financials. Please let us know if you have any questions regarding these changes.
Trade negotiations continued to be the primary catalyst for the markets last week. Conflicting reports continued to surface regarding the progress on Phase One of the negotiations. News reports suggested the two sides were stuck on many of the same issues we have discussed in the past, i.e. the elimination of all the existing tariffs, the manner and mechanisms to be used to enforce the accord, intellectual property protection, and the amount of agricultural purchases the Chinese would make. Numerous US officials came out in defense of the negotiation’s progress. On Friday, Larry Kudlow, NEC director, announced that the two sides were close to Phase One of the deal being reached. Of note, the escalation of violence in Hong Kong last week subdued sentiment on trade and could perhaps play out to be a significant factor in the negotiations going forward as conintued protests appear likely.
To start the week, many investors looked forward to catalysts stemming from Fed Chairman, Jerome Powell’s two-day testimony in front of congress and also from President Trump’s speech to the Economic Club of New York. Neither of the events yielded much market action as Powell only reiterated his prior take on monetary policy, and Trump stayed to script and offered nothing new on the trade front.
It was a fairly busy week on the corporate news front. Earnings continued to come out with notable weakness in Cisco Systems and a weaker than expected revenue outlook from NVidia. However, Disney announced on the first day of its Disney + offering that it had signed up 10 million subscribers- the news sent share soaring. Additionally, Boeing announced that it expects 737 Max deliveries to resume in December, which boosted shares higher. KKR, a large private equity firm, also announced that it was pursuing a leveraged buyout of Walgreens, which also helped market sentiment.