Markets “In a Nutshell” for December 10, 2019

Investment Week at a Glance

Stocks finished mostly up for the week. The Dow Jones Industrial Average was down 0.13%, the S&P 500 rose 0.16%, the New York Stock Exchange Composite (2,000 stocks) rose 0.32% and the average investors index (Value Line Index) was up 0.36%. Foreign stocks (DJ Global ex U.S.) were up 0.64%. Bond prices were lower for the week, with the 10-year U.S. Treasury ending the week 4 basis points higher at 1.80%. (Data source: Wall Street Journal)

Breakout Jobs Report

The U.S. Labor Department released its monthly jobs data report last Friday and revealed that the U.S. labor market continues to impress and easily power through an uncertain trade environment. U.S. employers added 266,000 jobs in November, beating estimates of 187,000 jobs and achieve the fastest pace of hiring since January. The unemployment rate dropped to an incredible 3.5% and wages also came in better than expected, rising 3.1% from this time last year. Most importantly, wages continue to stay well above the rate of inflation, increasing consumers purchasing power.

This is much needed news for an economy that has been almost solely powered by consumer spending ever since the trade dispute began and has given businesses, who have been forced to rethink plans on investment, time and flexibility to make stronger investment decisions. While this report doesn’t hold any power in being able to predict the future of the labor market, it does show just how resilient the U.S. economy is today and hopefully sends an optimistic signal to a market that has been seeking out reasons for the past year for why everything might fall apart. (Wall Street Journal)

More Tariff Targets

Markets were forced to digest more tariff news last week with the U.S. administration moving beyond targeting just China and implementing steel and aluminum tariffs on Brazil and Argentina, while also threatening France with a full 100% tariff on specific French goods if the country goes forward with a digital service tax that would largely be inflicted on U.S. tech companies. While negotiations with China continue and progress seems to be picking up, tariffs on $165 billion of Chinese goods are set to go into effect on December 15th if no agreement is reached between the two countries. A delay is more than likely going to happen, but clearly the President’s trade team is not letting up on trade pressure, even on allies, despite the constant news of progress from U.S. and Chinese officials. This news may be signaling that tariffs are now a more permanent tool to achieving U.S. interests and moving diplomacy to the side. (Barron’s)

Quiz:

What is the best performing S&P 500 sector so far through 2019?

          a. Information technology

          b. Health care

          c. Consumer services

          d. Utilities

 

 

 

Answer is below.

 

Have a good week!

 

 

 

 

 

 

Answer to quiz:

a. Information Technology is the best performing sector in the S&P 500 so far this year with a total return of 42.59% as of December 9, 2019.