Month: November 2019

Equities achieved a new all-time high on Monday, though the markets closed lower for the week. The Nasdaq fell 0.21 percent, the S&P 500 Index 0.31 percent and the Dow Jones Industrial Average 0.46 percent.

Healthcare was the best performing sector. SPDR Healthcare gained 0.83 percent. The pharmaceutical and biotechnology subsectors provided the momentum. iShares Nasdaq Biotechnology (IBB) climbed 3.33 percent and SPDR S&P Pharma (XPH) 3.31 percent.

SPDR Financials (XLF) rose 0.50 percent aided by Charles Schwab (SCHW) announcing a buyout of TD Ameritrade (AMTD). The news boosted shares of both companies. Schwab rallied 8.68 percent and Ameritrade 18.14 percent. iShares U.S. Broker Dealers (IAI) gained 1.65 percent.

Economic data shows a strengthening economy. The November flash manufacturing and service PMIs from Markit came in much stronger than forecast. The University of Michigan’s flash consumer sentiment reading for November was also higher than analysts forecasted. The Philly Fed’s measure of manufacturing activity in its region was up sharply from October.

Housing starts and existing home sales increased in October but came in slightly below estimates. Building permits were stronger than predicted. The National Association of Homebuilders’ homebuilder confidence index was 70 in November, down 1 point from October, but still hovering near post-2008 highs.

Initial claims for unemployment matched the prior week’s figure of 227,000.

While the U.S. economy shows strength, Europe, Japan, the United Kingdom and Australia all reported flash PMIs below the 50 level, indicating contraction. The U.S. Dollar Index finished at a six-week high.  iShares MSCI EAFE (EFA) declined 0.50 percent for the week and iShares MSCI Emerging Markets (EEM) slid 0.60 percent.

Bond yields fell this week. The 10-year Treasury yield dipped to 1.77 percent. Corporate and investment grade bonds rallied. Fidelity Corporate Bond (FCOR) advanced 0.47 percent.

Retail earnings season has been generally positive with major retailers such as Wal-Mart (WMT) and Target (TGT) delivering good news. TGT gained 12.86 percent after a solid report this week. Home improvement retailers Home Depot (HD) and Lowe’s (LOW) diverged following their earnings reports. HD fell 8.14 percent for the week, while LOW gained 2.29 percent. Auto auctioneer Copart (CPRT) rallied 3.84 percent.

Equities were mixed on Monday. The S&P 500 set a new all-time high after gaining 0.05 percent. Consumer staples were the best performing sector. SPDR Consumer Staples (XLP) increased 0.52 percent. SPDR Consumer Discretionary (XLY) and SPDR Communication Services (XLC) both increased 0.35 percent.

The National Association of Homebuilders’ confidence index fell one point to 70 in November, yet still near multi-year highs. More housing data is due this week with October housing starts, building permits and existing home sales. iShares U.S. Home Construction (ITB) gained 1.02 percent on Monday.

iShares Edge MSCI Minimum Volatility USA (USMV) increased 0.25 percent on Monday.

iShares MSCI EAFE (EFA) gained 0.12 percent, while iShares MSCI Emerging Markets (EEM) fell 0.12 percent.

The minutes of the last Federal Reserve meeting are out on Wednesday. Fed Chairman Powell met with President Trump at the White House today.

Friday brings flash manufacturing PMIs and the University of Michigan’s consumer sentiment index. Analysts expect an uptick in PMIs and a small dip in consumer sentiment.

China signaled pessimism about trade talks after violent clashes with Hong Kong university students. A bill supporting the protestors is circulating in the Senate. China has indicated interference in Hong Kong could sink trade negotiations. The central bank cut interest rates in China after another bank needed rescue. It was the fifth bank bailed out this year and the third in the past month.

The U.S. Dollar Index fell 0.19 percent to start the week. Although the dollar has been stuck in neutral versus major currencies such as the euro, yen and Chinese yuan, it is threatening to breakout versus Latin American currencies.

Retailers look to build on their strong open to earnings season following Wal-Mart’s (WMT) positive report. Headliners this week include Target (TGT), The Home Depot (HD), TJX Companies (TJX), Kohls (KSS), Lowes (LOW),Urban Outfitters (URBN), Macy’s (M), Ross Stores (ROSS), Nordstrom (JWN), Gap (GPS), L Brands (LB), BJ’s Wholesale Club (BJ) and Foot Locker (FL).

Also reporting this week are Medtronic (MDT), Copart (CPRT), Jack in the Box (JACK), Pinduoduo (PDD), Intuit (INTU), Splunk (SPLK) and J.M. Smucker (SJM).

Major equity indexes achieved new all-time highs this week. The Dow Jones Industrial Average increased 1.18 percent on the week. The S&P 500 Index increased 0.88 percent and the Nasdaq rose 0.76 percent.

SPDR Healthcare climbed 2.45 percent this week. Health insurance stocks surged with iShares U.S. Healthcare Providers (IHF) gaining 3.50 percent on Friday. SPDR Technology increased 1.30 percent.

Low volatility shares also were up solidly this week. iShares Edge MSCI Minimum Volatility USA (USMV) rose 1.24 percent.

Boeing (BA) jumped 5.89 percent after the aerospace giant said it could resume deliveries of its 737 MAX jet sooner than expected. iShares U.S. Aerospace & Defense (ITA) rallied 2.92 percent.

Economic data was solid. The National Federation of Independent Business small business confidence index increased to 102.4 in October, up from 101.8. The consumer price index climbed 0.4 percent in October, higher than the expected 0.3 percent. Core CPI increased 0.2 percent, as expected.

Producer prices increased 0.4 percent versus 0.3 percent expected. The Federal Reserve, among others, had been worried about low inflation and even deflationary pressure. This confirms the economy is strengthening.

October retail sales increased 0.3 percent, higher than the 0.2 percent forecast. Auto sales drove the results.

Retailer companies issued a number of reports this week. Wal-Mart (WMT) beat estimates, but its shares slipped 0.45 percent on the week. Smaller retailers such as Dillard’s (DDS) reported strong results. Its shares increased 10.59 percent. SPDR Retail (XRT) increased 0.91 percent.

Strong economic data boosted higher-yielding debt and falling yields lifted investment grade, corporate and government bonds.

iShares MSCI EAFE (EFA) declined 0.09 percent and iShares MSCI Emerging Markets (EEM) fell 1.26 percent on the week. Chinese economic data was worse than expected. Chile’s currency tumbled as the country deals with escalating protests. The sliding peso dragged down Latin American shares.