September 2 – September 6 Week in Review
The stock market rallied for the second straight week, supported by encouraging developments in trade and politics and continued good news about the strength of the U.S. economy. The S&P 500 rose 1.8%, the Nasdaq Composite gained 1.8%, and the Dow Jones Industrial Average increased 1.5%. The Russell 2000 trailed its larger-cap peers, rising 0.7%.
Last week's leaders included the cyclical S&P 500 consumer discretionary, energy, and information technology sectors all of which rose over 2.0%. The defensive oriented utilities and health care sectors were the lone groups that increased less than 1.0%.
The Labor Day shortened trading week began on a down note, as retaliatory tariffs from the U.S. and China went into effect and data from the ISM showed the U.S. manufacturing sector slipped into contraction territory in August for the first time since 2016.
Stocks rallied sharply on Tuesday and Wednesday, however, as Hong Kong said it would withdraw its extradition bill and China said it agreed to meet in Washington for trade talks in early October. The takeaway from the Hong Kong and U.S.-China trade situations was that conditions did not deteriorate, which put investors in a good mood. A lack of any bad news continued to push the markets higher on Thursday and Friday.
A slate of supportive economic data, including solid growth in non-manufacturing activity for August, have helped stave off recessionary fears. The Employment Situation Report for August on Friday did, however, show U.S. hiring activity slow down to a more modest pace. Specifically, nonfarm payrolls increased by 130,000 and nonfarm private payrolls increased by 96,000. A closer inspection, though, showed that more people are working and earning money, which is good for supporting the economic expansion, which Fed Chair Powell said the Fed is intent on sustaining according to remarks he made in Zurich last week.
On the interest rate front U.S. Treasuries finished lower last week, pushing yields slightly higher. The 2 year yield increased two basis points to 1.52%, and the 10 year yield increased four basis points to 1.55%, further steepening the yield curve.
In other markets WTI crude rose 2.5%, or $1.39, to $56.45 a barrel. The U.S. Dollar Index fell 0.5% to 98.42. Some of its weakness was attributed to noticeable strength in the British pound as the British Parliament moved to block a no-deal Brexit on Oct. 31.
September 9 – September 13 Economic Calendar