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December 10 – December 14 Week in Review

The markets returned to their losing ways last week as the S&P 500 lost 1.26%, the Dow Jones Industrial Average fell 1.18%, and the Nasdaq Composite lost 0.84%. Continued uncertainty surrounding economic growth, trade, politics, and the path of interest rates kept most buyers on the sidelines.  Heightened trading volatility has also proved effective in keeping investors from stepping back in. Additionally, some cautious-sounding commentary on the economic outlook from European Central Bank President Draghi, weaker than expected industrial production and retail sales data from China, and weaker than expected preliminary manufacturing PMI readings out of the Eurozone fueled the negative perspective on growth prospects and the possibility of downward revisions to earnings estimates.

There were some conciliatory headline developments last week on the trade dispute between the U.S. and China.  In particular, high-ranking U.S. and Chinese officials resumed trade discussions over the phone; and China is reportedly looking to tweak its "Made in China 2025" policy to allow more access and fairer competition for foreign companies.

Separately, China confirmed it will temporarily reduce its U.S auto import tariffs by 25% (to 15% from 40%) between January 1 and March 31, as both sides continue to work on a deal, and President Trump told Reuters he would get involved in the Department of Justice case against Huawei CFO Meng Wanzhou, who was granted bail Tuesday, if it would serve national security interests and help advance trade negotiations with China.

These positive-sounding trade headlines offered some hope of a deal being struck, but ultimately, the talk wasn't enough to overcome the fundamental concerns about a slowdown in economic growth.

The S&P 500 energy, health care, and real estate sectors were some of the hardest-hit groups last week.

Johnson & Johnson, meanwhile, was one of the hardest-hit stocks.  The Dow component plunged 10% on Friday after a Reuters report alleged that they "knew for decades that asbestos lurked in its baby Powder." The company's litigation counsel rejected the Reuters report as "false and misleading," yet the stock nonetheless traded as if investors felt there was some truth to it.

Energy stocks struggled as oil prices pulled back. WTI crude fell 2.5% this week to $51.27 a barrel.

Not all was bad, though.  The S&P 500 information technology ended the week roughly flat while the communication services and utility sectors were able to finish in the green this week.

Recent demand for Treasuries cooled off, giving yields a slight bump. The Fed sensitive 2 year yield rose three basis points to 2.73%, and the benchmark 10 year yield rose four basis points to 2.89%.

Overseas, UK Prime Minister Theresa May survived a "no-confidence" vote from her own Conservative Party with respect to her leadership. The vote came after she delayed a vote in the House of Commons on the UK-EU Brexit plan.  She subsequently attempted to renegotiate the plan in Brussels, yet EU officials said the plan was not open for change.

December 17 – December 21 Economic Calendar

  • Monday
  • Empire State Mfg Survey
    8:30 AM ET
  • Housing Market Index
    10:00 AM ET
  • Tuesday
  • FOMC Meeting Begins
  • Housing Starts
    8:30 AM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • Current Account
    8:30 AM ET
  • Exisiting Homes Sales
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • FOMC Meeting Announcement
    2:00 PM ET
  • FOMC Forecasts
    2:00 PM ET
  • Fed Chair Press Conference
    2:30 PM ET
  • Thursday
  • Jobless Claims
    8:30 AM ET
  • Philadelphia Fed Business Outlook Survey
    8:30 AM ET
  • Leading Indicators
    10:00 AM ET
  • EIA Natural Gas Report
    4:30 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Friday
  • Durable Goods Orders 
    8:30 AM ET

     

     

  • GDP
    8:30 AM ET
  • Corporate Profits
    8:30 AM ET
  • Personal Income and Outlays
    10:00 AM ET
  • Consumer Sentiment
    10:00 AM ET
  • Kansas City Fed Manufacturing Index
    11:00 AM ET
  • Baker-Hughes Rig Count
    1:00 PM ET

PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. This commentary is a matter of opinion and is for informational purposes only. It is not intended as investment advice and does not address or account for individual investor circumstances. Investment decisions should always be made based on the client's specific financial needs, goals and objectives, time horizon and risk tolerance. The statements contained herein are based solely upon the opinions of Telemus Capital, LLC. All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice. Information was obtained from third party sources, which we believe to be reliable, but not guaranteed.

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