Market Indexes: It was another up week for the market, with indexes making new highs, as investors were buoyed by stronger building permits figures, and renewed optimism from the signed trade deal.
“The US and China announced an initial trade deal on Wednesday that will roll back some tariffs and boost Chinese purchases of U.S. goods and services, defusing an 18-month conflict between the world’s two largest economies. Beijing and Washington have portrayed their “Phase 1” agreement as a momentous step after months of start-stop talks punctuated by tit-for-tat tariffs that uprooted supply chains and stoked fears of a further slowdown in the global economy.
The centerpiece of the deal is a pledge by China to purchase at least an additional $200 billion worth of U.S. farm products and other goods and services over two years, over a baseline of $186 billion in purchases in 2017. The deal would reportedly include $50 billion in additional orders for U.S. agricultural products.
The Phase 1 deal, reached in December, canceled planned U.S. tariffs on Chinese-made cellphones, toys and laptop computers and halved the tariff rate to 7.5% on about $120 billion worth of other Chinese goods, including flat panel televisions, Bluetooth headphones and footwear.
But it will leave in place 25% tariffs on a vast, $250 billion array of Chinese industrial goods and components used by U.S. manufacturers.” (Reuters)
Volatility: The VIX fell 42.89% this week, ending the week at $12.10.
High Dividend Stocks: These high yield stocks go ex-dividend next week: SUNS.
Market Breadth: 25 out of 30 DOW stocks rose this week, vs. 14 last week. 85% of the S&P 500 rose, vs. 56% last week.
FOREX: The USD rose vs. most major currencies, except the Swiss franc.
Economic News:
“U.S. job openings recorded their biggest drop in more than four years in November while hiring increased moderately, suggesting a loss of momentum in the labor market at the tail end of 2019.
Job openings, a measure of labor demand, tumbled 561,000 to 6.80 million, the lowest reading since August 2015, the Labor Department said in its monthly Job Openings and Labor Turnover Survey, or JOLTS, on Friday.
Vacancies have been trending lower this year since hitting an all-time high of 7.63 million in late 2018. The decline in job openings in November was led by the private sector, which saw a decrease of 520,000 unfilled jobs. The drop in vacancies was concentrated in the retail and construction industries.” (Reuters)
“Housing starts jumped 16.9% to a seasonally adjusted annual rate of 1.608 million units last month, the highest level since December 2006. The percentage gain was the largest since October 2016. Groundbreaking activity last month was likely boosted by unseasonably mild weather.
Despite the surge in December, starts remained below levels seen at the peak of the housing market bubble between 2005 and early 2006.” (Reuters)
“U.S. industrial production fell 0.3% in December, as unseasonably warm weather reduced demand for heating from utilities.
The Federal Reserve said Friday that total industrial production — which includes the manufacturing, mining and utilities sectors — slumped 1% over the past year. Factory output has tumbled 1.3% from a year ago, driving much of the overall decline as manufacturers grappled with trade disputes and slower global growth in 2019.” (AP)
Week Ahead Highlights: US markets will be closed on Monday for the Martin Luther King Jr. holiday.
7 DOW stocks will report earnings next week, including Intel (NASDAQ:INTC), J&J, and IBM (NYSE:IBM).
“Earnings reports from Netflix (NASDAQ:NFLX), Intel (NASDAQ:INTC) and Texas Instruments (NASDAQ:TXN) next week may hint at what is to come in the December quarterly earnings season, with some investors wary of possible danger signs that could knock Wall Street after its latest surge to record highs. Analysts on average expect reports to show S&P 500 earnings per share fell 0.8% in the fourth quarter, with technology earnings seen up 0.6%, according to IBES data from Refinitiv. Earnings estimates for the fourth quarter have already weakened slightly in the latest week as initial reports from big banks and a smattering of other companies filtered in.” (Reuters)
Next Week’s US Economic Reports:
Sectors: Utilities and Tech led this week; Energy lagged.
Futures: WTI Crude fell -.34% this week, finishing at $58.84.
