December 2 - December 6 Week in Review
It was a mixed bag for the markets last week. The S&P 500 increased 0.2% and the Russell 2000 rose 0.6% in choppy trading. Meanwhile the Dow Jones Industrial Average, down 0.1%, and the Nasdaq Composite, also down 0.1%, were unable to recoup their losses from earlier in the week.
This week's sector leaders included the S&P 500 energy, consumer staples, health care, and financials sectors. The industrials, consumer discretionary, information technology, and real estate sectors finished lower.
Last week began with the S&P 500 dropping about 70 points, or 2.3%, in less than two sessions. The two primary catalysts were a weaker-than-expected ISM Manufacturing Index for November and President Trump suggesting that a trade deal with China might be better if it waited until after the 2020 election.
The news might have been good excuses to take some profits after a great month of November (and year), but an opportunistic mindset quickly took hold. Risk sentiment was first supported by reports that trade talks are nearing a deal and was later buoyed by a stronger-than-expected November employment report.
Nonfarm payrolls climbed 266,000, firmly beating expectations and coming in above the upwardly revised readings for October and September. The unemployment rate ticked down to 3.5%, and average hourly earnings increased 0.2%.
On Friday, China added to the upbeat trade mood after it said it began to exempt some U.S. agricultural purchases from tariffs. On a related note, tariffs on steel and aluminum imports from Argentina and Brazil were restored after the countries devalued their currencies, while $2.4 billion of French imports may be taxed up to 100% after France passed a digital tax law that allegedly targets U.S. tech companies.
U.S. Treasuries had some big swings but ultimately finished near their unchanged marks from the prior week. The 2 year yield increased two basis points to 1.63%, and the 10 year yield increased one basis point to 1.84%.
In other markets the U.S. Dollar Index fell 0.6% to 97.68. WTI crude climbed 7.3% to $59.20 a barrel, as OPEC agreed to cut oil production by 500,000 barrels per day during the first quarter of 2020.
December 9 – December 13 Economic Calendar