The major indices just finished another positive week, including the sixth straight for the NASDAQ, thanks to a couple new trade deals, a solid start to earnings season and better-than-expected economic data.
The NASDAQ easily kept that winning streak alive with a rise of 2.3% this week, while the S&P and Dow have now gone back-to-back with advances of nearly 2% and 1.8%, respectively.
The biggest news this week was the signing of a Phase 1 deal between the U.S. and China, which was the first official progress made in their long trade conflict.
The very next day saw the Senate’s passage of the USMCA deal, which is the U.S./Mexico/Canada replacement of NAFTA.
Meanwhile, earnings season had a strong start with a number of positive reports, especially from JPMorgan (NYSE:JPM) and Morgan Stanley (NYSE:MS), among others.
And just today we got truly impressive housing starts data, which soared 17% in December to a 13-year high. Such numbers go nicely with other solid data from this week, including initial jobless claims and retail sales.
In other words, it was a good week all around!
No one would have complained if the market decided to take a breather on Friday (especially after yesterday’s rally), but stocks still managed modest gains to close out the week.
And even modest gains make history when you start the session at all-time highs.
The S&P advanced 0.39% to 3329.62, while the NASDAQ rose 0.34% (or nearly 32 points) to 9388.94. The Dow was up 0.17% (or about 50 points) to 29,348.10.
Another highlight of the week was the Dow and S&P crossing over 29,000 and 3,300, respectively, for the first time.
Earnings season will take center stage next week without any major trade deals being signed. Forty S&P names are scheduled, including Netflix (NASDAQ:NFLX), Intel (NASDAQ:INTC), Johnson & Johnson (NYSE:JNJ) and Proctor & Gamble, along with several airlines and railroads.
Make sure to read Sheraz Mian’s latest Earnings Preview for more on earnings season so far and what to expect moving forward.
Today's Portfolio Highlights:
Surprise Trader: Earnings estimates for PolyOne (POL) have been creeping higher over the past four months after moving lower in late 2018/early 2019. As a result, shares are back up to approximately $36. Dave thinks this Zacks Rank #2 (Buy) polymer materials and services provider could continue advancing, especially since it has an Earnings ESP of 1.94% for the quarter coming before the bell on Tuesday, January 28. He added POL on Friday with a 12.5% allocation. See the full write-up for more on this new addition.
Insider Trader: "The big caps continue to grind higher, with many hitting daily highs.
"Will there be a pullback? I should hope so. Pullbacks and sell-offs are perfectly normal and healthy in a bull market.
"I would expect a 3% to 5% pullback to come soon. BUT- we're getting the earnings of FAANG starting next week and that could light a fire even further under some of these big caps." -- Tracey Ryniec
Options Trader: "What a week it’s been. Phase 1 of the U.S.-China trade deal was finally signed and made official. And the USMCA trade deal finally passed the Senate.
"These two historic trade deals with our three largest trading partners are expected to add as much as three quarters of a percentage point to this year’s GDP.
"This comes on the heels of already having a record economy with our annual GDP pacing at a stronger rate than the average annual GDP of this entire bull market, unemployment at a 50-year low, and household income at a 20-year high.
"And based on Friday’s Housing Starts report for December, you can add the biggest increase for housing starts in 13 years!
"Some have called this the best economy of our lifetime. And I would agree." -- Kevin Matras
Have a Great Weekend,
Jim Giaquinto
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