Market Update- December 16, 2019
The Week on Wall Street
The U.S. and China announced a limited trade agreement last week. That news lifted U.S. and foreign stocks, leading to weekly gains.
Advancing 0.91% on the week, the Nasdaq Composite outperformed the S&P 500 (up 0.73%) and Dow Jones Industrial Average (up 0.43%). The MSCI EAFE index, measuring the performance of developed markets overseas, improved 0.42%.[i],[ii]
Phase-One Trade Deal Reached, December Tariffs Averted
Friday, White House and Chinese officials confirmed an agreement on what has been characterized as an initial step toward a larger trade pact. As a result of this phase-one deal, new U.S. tariffs (slated to go into effect on December 15) were canceled. The 15% tariffs (imposed on $110 billion of Chinese goods in September) now fall to 7.5%.
In return, China commits to buy greater quantities of American crops, factory goods, and energy products.[iii]
Fed Holds Steady on Short-Term Interest Rates
The last Federal Reserve meeting of the year brought no adjustment for the federal funds rate. The vote to leave short-term rates unchanged was unanimous.
After the meeting, Fed chair Jerome Powell told the media, “as long as incoming information about the economy remains broadly consistent with [our] outlook, the current stance of monetary policy will likely remain appropriate.”[iv]
Retail Sales Disappoint
Economists, surveyed by Bloomberg, expected a retail sales gain of 0.5% for November, but according to the Department of Commerce, the advance was only 0.2%. In a bright spot for analysts who wanted to see a strong start to the holiday shopping season, sales at online retailers rose 0.8% last month.[v]
Note: There will be no Weekly Market Update next week, but we will be back on December 30 with a special “Year-in-Review” edition of the WMU. Have a happy holiday season!
THE WEEK AHEAD: KEY ECONOMIC DATA
Tuesday: The Census Bureau offers a snapshot of November residential construction activity.
Thursday: A look at November existing home sales from the National Association of Realtors.
Friday: November personal spending data and the third estimate of third-quarter economic expansion from the federal government, plus the year’s final University of Michigan Consumer Sentiment Index (which measures consumer confidence levels).
THE WEEK AHEAD: COMPANIES REPORTING EARNINGS
Tuesday: FedEx (FDX)
Wednesday: General Mills (GIS), Micron Technologies (MU), Paychex (PAYX)
Thursday: Accenture (ACN), Nike (NKE)
Friday: CarMax (KMX)
[i]https://www.wsj.com/market-data
[ii]https://quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices
[iii]https://www.marketwatch.com/story/trump-announces-phase-one-china-trade-deal-and-scraps-dec-15-tariffs-2019-12-13
[iv]https://www.bloomberg.com/news/articles/2019-12-11/fed-leaves-rates-unchanged-and-forecasts-show-no-change-in-2020
[v]https://www.bloomberg.com/news/articles/2019-12-13/u-s-retail-sales-miss-forecasts-for-pickup-as-restaurants-drop