Year: 2019

Equities rallied as the U.S. and China finalized a phase-one trade agreement. The Nasdaq advanced 0.91 percent, the S&P 500 Index 0.73 percent and the Dow Jones Industrial Average 0.43 percent on the week.

The phase-one trade deal was light on details, but the U.S. will not hike tariffs on December 15 and it will rollback some tariffs as a first step. China says it will purchase more agricultural products, although there are no specific numbers. China reduced imports by about half this year, from its prior high of approximately $20 billion. President Trump said phase-two negotiations will begin immediately, although a deal is unlikely before the 2020 election.

iShares China Large-Cap (FXI) gained 3.32 percent for the week. iShares MSCI Emerging Markets (EEM) advanced 3.15 percent, PowerShares DB Agriculture (DBA) 1.85 percent and VanEck Agribusiness (MOO) 1.83 percent.

VanEck Semiconductor (SMH) jumped 4.29 percent as many semiconductor firms export to China. SPDR Technology (XLK) advanced 2.01 percent.

The Federal Reserve held interest rates steady. Chairman Jerome Powell reiterated that it would take significant inflation for the Federal Reserve to hike interest rates. The Fed also announced its planned repo operations for the next month. It could pump as much as $500 billion into the financial system through January 14. SPDR Financial (XLF) gained 1.05 percent for the week, with the gains occurring after the Fed’s announcement.

Consumer inflation was higher than expected at a headline 0.3 percent in November, but core CPI met expectations of 0.2 percent. Retail sales were weaker than forecast in November, growing 0.2 percent. This was down from 0.3 percent in October. However, with Thanksgiving coming late this year, the holiday shopping season was cut short. Cyber Monday fell in December and online sales are an growing share of the total retail pie.

British voters handed Prime Minister Boris Johnson the largest majority for his party since the Margaret Thatcher era. This was a clear vote in favor of finalizing the United Kingdom’s exit from the European Union. The pound rallied more than 3 percent this week versus the U.S. dollar. iShares MSCI United Kingdom (EWU) gained 3.59 percent.

Adobe (ADBE) beat earnings and revenue forecasts, lifting shares more than 4 percent on Friday. Broadcom (AVGO) also beat both profit and sales estimates, though its shares slipped more than 3 percent. Ciena (CIEN) was another winner, with shares climbing 18.23 percent following their earnings report. Oracle (ORCL) finished down only 0.57 percent after beating earnings, but missing on revenue.

Equities traded in a tight range on Monday, with the S&P 500 Index slipping 0.32 percent.

Consumer sectors were the best performers on the day. SPDR Consumer Discretionary (XLY) rallied 0.12 percent and SPDR Consumer Staples (XLP) 0.08 percent.

The U.S.-China trade talks will take centerstage over the coming days. If the two countries cannot finalize a deal by the December 15 deadline, the U.S. could raise tariffs on Chinese imports. Expect higher volatility from Chinese-related stocks, particularly if there’s no indication of a deal.

The National Federation of Independent Business releases its small business confidence index for November on Tuesday.

Inflation data and retail sales are out later in the week. Economists predict consumer prices, core CPI and producer prices all increased 0.2 percent in November. They see retail sales climbing 0.5 percent and 0.4 percent ex-autos.

China will release several key data points this week including inflation and lending for November, followed by industrial data on Sunday night.

On Thursday, the United Kingdom votes in a general election. Polling is tightening, though current Prime Minister Boris Johnson maintains a six-point advantage. A comfortable victory by Johnson would give him the votes to complete a Brexit deal with the European Union. A resolution would lift the cloud of uncertainty that has been hanging over the country since 2016. iShares MSCI United Kingdom (EWU) gained 0.12 percent.

Crude oil held near $59 per barrel on Monday, slightly below Friday’s close. Last week, OPEC agreed to cut production by 500,000 barrels per day. SPDR Energy (XLE) fell 0.12 percent.

This week is light on earnings. MongoDB (MDB) and Toll Brothers (TOL) both beat earnings forecasts on Monday, sending shares higher after hours.

The headliners this week are Broadcom (AVGO), Adobe Systems (ADBE), Oracle (ORCL), Costco (COST) and Ciena (CIEN), all on Thursday. Other companies reporting this week include Ollies Bargain Outlet (OLLI), GameStop (GME), Conns (CONN), Lululemon (LULU) and American Eagle Outfitters (AEO).

Equities rallied Friday after a strong employment report. The Bureau of Labor Statistics stated employers created 266,000 new jobs in November. The return of striking General Motor’s workers accounted for approximately 40,000 of the gains.

The consensus forecast was 180,000 new jobs including those GM workers. The unemployment rate declined to 3.5 percent and wage growth was a solid 0.2 percent. In addition to November’s gains, the government revised its September and October totals. There were 41,000 more jobs than previously reported. This report follows a strong jobs report in October that also included substantial upward revisions to the prior two months.

The S&P 500 Index rallied 0.91 percent on Friday and 0.14 percent for the week. The Nasdaq gained 1.00 percent on the day, though is decreased 0.11 percent on the week. The Dow Jones Industrial Average achieved even better performance, returning 1.33 percent on Friday.

Energy, consumer staples, healthcare and financials were the best performing sectors. SPDR Energy (XLE) rallied 1.46 percent after OPEC agreed to cut production by 500,000 barrels per day. Crude oil increased to $59 per barrel. SPDR Consumer Staples (XLP) advanced 1.06 percent, SPDR Healthcare (XLV) 0.91 percent and SPDR Financials (XLF) 0.71 percent.
Manufacturing PMIs were mixed. The Markit survey increased, while the ISM survey decreased. U.S. manufacturing remains stronger than Europe and China. Motor vehicle sales increased at an annualized pace of 17.1 percent in November.
Consumer confidence spiked in early December. The University of Michigan’s advance reading jumped to 99.2, up from 96.8. The strong labor market is undoubtedly contributing to rising consumer sentiment.

The 10-year Treasury yield climbed to 1.84 percent. Still, floating rate funds were up sharply this week. Invesco Senior Loan (BKLN) rallied 1.07 percent and iShares iBoxx High Yield Corporate Bond (HYG) 0.38 percent.

iShares MSCI Emerging Markets (EEM) advanced 1.22 percent on hopes for a trade deal next week. If there is no deal by next Sunday, December 15, the U.S. will increase tariffs on Chinese imports. Foreign markets also benefited from a rallying British pound ahead of the United Kingdom’s upcoming general election. The pound advanced 1.62 percent versus the dollar. That helped the euro, and both weighed on the U.S. Dollar Index, which fell 0.50 percent.

Salesforce.com (CRM), ZScaler (ZS), Aerovironment (AVAV), Land’s End (LE) and WorkDay (WDAY) were among the firms beating earnings estimate this week. Land’s End saw the strongest move. It gained 27.76 percent for the week.