Telemus Weekly Market Review October 28th - November 1st, 2019

October 28 - November 1 Week in Review

It was hard to keep a good man down last week as the S&P 500, up 1.5%, and the Nasdaq Composite, up 1.7%, both set record highs. The other major averages participated as well with the Dow Jones Industrial Average gaining 1.4%, and the Russell 2000 2.0% respectively.

It was a macro driven week that featured news from the Fed, the jobs report, earnings reports from Apple and Facebook, and even a little bit of trade news. The Fed is a good place to start after it cut the target range for the fed funds rate by 25 basis points to 1.50-1.75%. This was expected, but the central bank signaled that another quarter point cut shouldn't be expected anytime soon. Fed Chair Powell added that he would need to see a significant rise in inflation for rates to increase, suggesting that the Fed is on hold as expectations for inflation remain relatively low.

The dovish tone from the Fed took the S&P 500 to all-time highs on Wednesday. The markets got another boost on Friday from the better than expected employment report for October and better than feared ISM Manufacturing Index for October. At week's end, eight of the 11 S&P 500 sectors were higher. The health care sector led the way followed by information technology, industrials, and the financials sectors. Real estate, energy, and the utilities sectors were left out of the rally.

Expectations for jobs growth were subdued given the 40-day strike at GM. As such the 128,000 nonfarm payrolls added to the economy not only exceeded estimates but also followed large upwards revisions for August and September. It should be noted however that the manufacturing sector remained in contraction territory for the third straight month.

There was more good news than bad for the market to digest last week. Rates are expected to remain low amid a resilient labor market and low inflation levels, the U.S. and China continue to work towards a trade deal, and Apple and Facebook reported positive quarterly results.

As for trade, it was reported that Chinese officials have expressed doubts about securing a comprehensive trade deal with President Trump, but the USTR office reportedly said that progress has been made in resolving outstanding issues. "Phase one" is also on track to be signed later this month, but not at the planned APEC summit in Chile which was cancelled due to the ongoing protests in the country.

U.S. Treasuries saw increased demand last week, which drove yields lower. The 2 year yield declined seven basis points to 1.56%, and the 10 year yield declined seven basis points to 1.73%.

In other markets the U.S. Dollar Index fell 0.6% to 97.24 last week and WTI crude oil closed at $56.23 a barrel.

November 4 – November 8 Economic Calendar