Market Perspective for July 13, 2019

The Dow Jones Industrial Average, Nasdaq and S&P 500 Index all made new all-time highs as strong economic data lifted stocks. The Dow crossed 27,000 for the first time and the S&P 500 Index closed above 3000. The Dow gained 1.51 percent, the Nasdaq advanced 1.02 percent and the S&P 500 Index climbed 0.78 percent. The Russell 2000 Index slid 0.32 percent.

The energy sector outperformed after oil rallied to $60 per barrel. Traders are betting tropical storm Barry could shut oil platforms and refineries in the Gulf Coast.  SPDR Energy (XLE) gained 2.14 percent on the week.

SPDR Consumer Discretionary (XLY) rose 1.95 percent, SPDR Communication Services (XLC) 1.63 percent and SPDR Technology (XLK) 1.50 percent.

Investors continued to favor quality and low volatility stocks. Despite a pullback in utilities and real estate, iShares Edge MSCI Minimum Volatility USA (USMV) returned 0.69 percent. Vanguard Dividend Appreciation (VIG) increased 1.02 percent.

The National Federation of Independent Business reported a 1.7-point decline in its small-business confidence index, though the survey remains near multi-decade highs. Small business owners continue to cite a lack of skilled workers as one of their chief concerns.

The Job Openings and Labor Turnover Survey (JOLTS) showed 7.3 million openings in May, down slightly from April. It remains near all-time highs and higher than the number of unemployed Americans. Weekly jobless claims slid to 209,000, below the expected 221,000.

Core consumer inflation rose faster than forecasted in June, up 0.3 percent versus 0.2 percent expectation. Core inflation has increased 2.1 percent over the past year, within the Fed’s target range. Headline inflation was also 0.1 percent higher than the consensus forecast, but has fallen to 1.6 percent over the past 12 months thanks to lower energy prices.

Producer prices also came in hotter than forecast at 1.7 percent versus 1.6 percent headline. Core producer prices have increased 2.3 percent over the past 12 months.

The 10-year Treasury yield rallied to 2.11 percent. The advance in yields sank many bond funds, though floating-rate funds advanced. PowerShares Senior Loan (BKLX) gained 0.18 percent.

Both Delta Air Lines (DAL) and Pepsi (PEP) beat earnings forecasts. Delta stock gained 5.03 percent on the news and Pepsi rose 0.20 percent.


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