Weekly Market Sitrep: December 16, 2019
In this week’s sitrep: the U.S. and China reach a phase-one trade deal, the Fed leaves the benchmark interest rate alone, and November retail sales come in below expectations.
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
Note: There will be no Weekly Market Sitrep next week, but we will be back on December 30 with a special “Year-in-Review” edition of the WMS. Have a happy holiday season!
TIP OF THE WEEK
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.
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).
Source: Econoday / MarketWatch Calendar, December 13, 2019 – The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision. The release of data may be delayed without notice for a variety of reasons.
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)
Source: Zacks.com, December 13, 2019 – Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
QUOTE OF THE WEEK
“Nothing in the world is permanent, and we’re foolish when we ask anything to last, but surely we’re still more foolish not to take delight in it while we have it.”
W. SOMERSET MAUGHAM
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1 – wsj.com/market-data [12/13/19]
2 – quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices [12/13/19]
3 – marketwatch.com/story/trump-announces-phase-one-china-trade-deal-and-scraps-dec-15-tariffs-2019-12-13 [12/13/19]
4 – bloomberg.com/news/articles/2019-12-11/fed-leaves-rates-unchanged-and-forecasts-show-no-change-in-2020 [12/11/19]
5 – bloomberg.com/news/articles/2019-12-13/u-s-retail-sales-miss-forecasts-for-pickup-as-restaurants-drop [12/13/19]