SANTA BROUGHT THE MARKETS MORE PRESENTS AND SOME LUMPS OF COAL DURING THE HOLIDAY SHORTENED WEEK

• The Christmas–shortened trading week brought investors more presents and less coal, as NASDAQ crested the 9,000-point threshold for the first time and the S&P 500 and DJIA set new records
• NASDAQ moved up 0.9% on the week, followed by the DJIA\’s 0.7% gain and the S&P 500’s 0.6% climb
• The small–cap Russell 2000 Index struggled to keep pace with the larger–cap indices and lost 0.2% on the week
• The week\’s big stock news was Amazon, as it jumped almost 5% on the week after announcing a record–shattering holiday season
• Given Amazon\’s move, the Consumer Discretionary sector led the other 10 S&P 500 sectors with a gain of 1.5%, followed by the 1.1% gain in the Information Technology sector
• All the sectors were up on the week, except Utilities which gave back 0.4%
• There was not much news on the week, as investors waited for the Phase One trade deal to be inked and China lowered tariffs on over 800 products
• U.S. Treasuries ended the week higher as the 2–Year came to rest at 1.58% and the 10–Year finished at 1.87%, furthering the spread between the two
• WTI crude rose 2.3% to $61.74/barrel

Weekly Market Performance

Large-Caps Up for the Final Week of the Year

Large–cap stock indices were up across the board, rising during the final week of 2019, including new records from the DJIA and the S&P 500 and NASDAQ breaching the 9,000 ceiling for the first time ever. But not all equities were in on the holiday spirit, as the smaller–cap and mid–cap indices declined modestly.

While there are still some trading days left in the year, the market is on pace to come close to 2013\’s return, which could bring it within a whisper of the best year on record over the past decade. Even more importantly, investors are relieved that December 2019 played out differently from last year, where the market really struggled in the final month and during the final week of the year.

Amazon Pushes NASDAQ to Crest 9,000

Late in the week, technology and retail giant Amazon reported record holiday sales, which pushed it to a gain of almost 5%, its best of 2019 by a decent amount. Amazon\’s jump and continued strength in the technology sector in general helped drive NASDAQ to cross the totally–symbolic 9,000 threshold for the first time ever.

Besides pushing NASDAQ to cross 9,000, Amazon\’s numbers helped drive the Consumer Discretionary sector to lead the market, followed closely by the Information Technology sector. Surprisingly, the smaller and mid–cap indices turned in red numbers on the week, reversing their more recent trends.

Phase One Deal is Sort of Done

Investors breathed a collective sigh of relief, as no news negatively impacting the announced Phase One deal materialized. Early in the week, President Trump reiterated that the “deal is done” but details of the deal have not yet been released. Chinese President Xi Jinping said that details would be released after an official signing ceremony.

The “no news is good news” approach seemed to bolster investor sentiment, as the markets have been see-sawing the past 2 years because of the trade dispute between the two giants.

As a result of the Phase One trade deal, Chinese stocks moved up for the fourth week in a row. Both the benchmark Shanghai Composite Index and large–cap CSI 300 Index, which are blue–chip benchmarks for the Shanghai and Shenzhen exchanges, were up slightly on the week.

Not Much Economic Data on the Week

Investors received little news this week on the economy, and the news was mixed – maybe even leaning slightly toward the negative side. Investors saw:

• MasterCard SpendingPulse reported that total retail sales, minus autos, jumped 3.4% year–over–year from November 1st to Christmas Day, while online sales skyrocketed over 18%
• Durable goods fell in November
• New home sales rose in November
• The manufacturing sector saw one of its key regional markers drop, suggesting that manufacturing is still struggling

Boeing’s CEO Resigned

Early in the week, trading of Boeing\’s stock was halted as it announced that its CEO was leaving due to challenges from its 737 Max airliner. After being cleared for trading, Boeing’s stock moved up and its bonds rallied too.

Overseas Markets Perform Well

Across the Atlantic, many of the larger markets turned in good numbers, driven in part by markets here in the U.S.

• The pan–European STOXX Europe 600 Index inched to another record high
• The UK\’s FTSE 100 Index was up
• Germany\’s DAX Index was up
• Italian stocks finished the week modestly lower
• The Nikkei 225 Stock Average was mostly unchanged and YTD is up almost 19%
• The large–cap TOPIX Index moved up a bit and is up about 16% YTD

Sources

federalreserve.gov; bea.gov; standardandpoors.com; factset.com; nyse.com; msci.com; nasdaq.com; dowjones.com; morningstar.com; edwardjones.com; bloomberg.com