Telemus Weekly Market Review January 6th - January 10th, 2020

January 6 – January 10 Week in review

It was another strong performance for the U.S. markets last week. The large-cap stock indexes hit new record highs, as tensions in the Middle East were quickly de-escalated and technology stocks continued to outperform. The technology heavy Nasdaq Composite rose 1.8% to lead the pack, the S&P 500 climbed 0.9%, and the Dow Jones Industrial Average rose 0.7%. The small cap Russell 2000 underperformed for the third straight week dropping 0.2%.

Iran remained a focal point, at least for the first half of the week after it escalated its hostile rhetoric against the U.S. and fired more than a dozen ballistic missiles against U.S. and coalition forces in Iraq. However whatever selling took place was quickly met with buying and a risk-on mindset following comments from President Trump that no further action was contemplated and the announcement that no American casualties occurred.

The mega-cap stocks within the S&P 500 information technology and communication services sectors continued to provide influential leadership last week. The energy sector, on the other hand, was the laggard amid a 6.4% drop in the price of oil which ended the week at $58.99 a barrel. Crude, which had spiked on the tensions with Iran, was pressured by bearish inventory data and skepticism that the Middle East situation would disrupt production as previously feared.

On Friday, the December jobs report showed 145,000 jobs were added to non-farm payrolls in December, which was less than the consensus forecast of 160,000 jobs and less than the readings for November and October. The soft report might have been a good reason for investors to take some profits on Friday from what many viewed to be an increasingly overbought market.

Separately, a Boeing 737-800 jetliner crashed shortly after takeoff in Tehran last week, killing all 176 passengers on board. President Trump and U.S. allies believed that the plane was shot down by Iranian missiles which initially denied responsibility. However late Friday Iran did admit that its forces had accidentally shot down the plane.

U.S. Treasuries ended the week slightly higher as money flowed back into riskier assets. The 2 year yield declined two basis points to 1.56%, and the 10 year yield declined four basis points to 1.83%.

In other markets the U.S. Dollar Index advanced 0.5% to 97.36.

January 13 – January 17 Economic Calendar