Markets “In a Nutshell” for December 17, 2019
Investment Week at a Glance
Stocks finished up for the week. The Dow Jones Industrial Average was up 0.43%, the S&P 500 rose 0.73%, the New York Stock Exchange Composite (2,000 stocks) rose 0.80% and the average investors index (Value Line Index) was up 0.58%. Foreign stocks (DJ Global ex U.S.) were up 1.97 %. Bond prices were higher for the week, with the 10-year U.S. Treasury ending the week 2 basis points lower at 1.78%. (Data source: Wall Street Journal)
Late last week, the U.S. and Chinese trade negotiation teams reached an agreement on a “Phase 1” trade deal that hopes to resolve most of the lower level issues between the two countries and bring much needed tangible progress to U.S. trade talks. While details are still scarce and signatures by the leaders of both countries aren’t expected until next year, what is largely believed to be part of the deal is for China to increase imports of U.S. products, with an emphasis on agriculture, in exchange for the U.S. to not implement the new round of tariffs that were scheduled for December 15th and to roll back an unknown amount of already imposed tariffs. The U.S. has already declared that the “Phase 2” negotiations will begin immediately, but those talks will almost certainly take much longer to negotiate given the two countries are tackling the much thornier issues between them.
In Congress, House Democrats came to an agreement with the White House trade negotiating team on the U.S.-Mexico-Canada trade agreement that contains greater labor protections than the current NAFTA deal in place today. The deal is expected to be signed by all countries early next year and provides a much needed lift to the future economic outlook for the U.S. and all other countries involved in the trade news flurry from last week. (Barron’s)
Fed Holds Rates
The Federal Reserve left rates unchanged to end their last meeting and left the perception that 2020 will not contain much action if the current environment persists. Last week’s decision comes after three consecutive rate cuts by a Fed committee that gave up worrying about inflation and decided being proactive in the face of global growth slowdown worries was the more prudent path to take. Based off the voting members of the Fed’s predictions, most do not see any cuts or hikes next year, but based of Fed President Jerome Powell’s press conference, the bar for a rate hike may be higher than some expect and the next move may very well be another cut if the current economic uncertainties persist. (Barron’s)
How much has Apple, the company with the largest U.S. market capitalization, returned so far in 2019?
Have a Great Week!
Answer to quiz:
4. Apple has returned 67% so far in 2019 (Barron’s).