November 4 - November 8 Week in Review
It was a record setting week for the U.S. equity markets. The S&P 500, up 0.9%, the Nasdaq Composite, up 1.1%, and the Dow Jones Industrial Average, up 1.2%, all closed at all-time highs. Cyclical sectors set the pace while U.S. Treasuries sold off. As has been the case of late the small-cap Russell 2000, up 0.6%, trailed its large-cap peers.
Commerce Secretary Wilbur Ross started the week by saying "good progress" was being made in "Phase One" negotiations. Progress consisted of discussions taking place to remove some tariffs in order to sign this first section, which will reportedly be pushed back to December as both sides continue to discuss terms and a venue.
China's Commerce Ministry announced that it reached an agreement with the U.S. for both sides to phase out tariffs, but President Trump said on Friday he had yet to agree to roll back existing tariffs. White House Director of Trade and Manufacturing Policy Peter Navarro confirmed reports that there were at least considerations being made to delay the Dec. 15 tariffs.
The key takeaway from all this was that the market continued to think that some sort of deal will still get done, unless there are material developments to suggest otherwise. This optimistic view continued to foster a risk-on mindset in the stock market and a bearish sentiment in the Treasury market.
Other positive reminders for the market were monetary policy remains favorable, the labor market remains strong, and the U.S. consumer remains in good shape. For some investors, this reinforced a fear of missing out on a market breaking out to record highs amid signs of trade progress.
The Dow Jones Transportation Average and S&P 500 financials sector outperformed this week and both groups hit 52-week highs. The Philadelphia Semiconductor Index and the S&P 500 information technology and industrials sectors set new all-time highs. The energy and materials sectors also did well.
The sell-off in the Treasury market sent yields higher in a curve-steepening trade that contributed to the outperformance of the financials last week. The higher yields, though, did hurt sentiment in the real estate and utilities sectors.
For the week the 2 year yield rose ten basis points to 1.66%, and the 10 year yield rose 20 basis points to 1.93%. In other markets the U.S. Dollar Index advanced 1.2% to 98.37 and WTI crude rose $1.00 to close at $57.21 a barrel.
November 11 – November 15 Economic Calendar