Telemus Weekly Market Review September 9th - September 13th, 2019

September 9 – September 13 Week in Review

It was another good one for the U.S. stock market as it extended its winning streak to three weeks. Value oriented sectors led the markets higher and closer to all-time highs. The S&P 500, which rose 1.0%, climbed back above the 3000 level while the Dow Jones Industrial Average, up 1.6%, rose back above 27000. The Nasdaq Composite did well, too gaining 0.9%. The small-cap Russell 2000 was the star performer, up 4.9%.

Improved outlooks for trade and growth helped generate renewed buying interest in value stocks, or those with less demanding valuations. The trade-sensitive Philadelphia Semiconductor Index advanced 2.4%. The S&P 500 financials and energy sectors, the SPDR S&P Retail ETF, and Dow Jones Transportation Average posted sizable gains as well.

Yesterday’s winners have suddenly become today’s losers. Former popular ideas like U.S. Treasuries, highly-valued growth stocks, and defensive-oriented stocks have fallen out of favor. The S&P 500 information technology, consumer staples, and real estate sectors all finished in negative territory last week.

The selloff in the Treasury market drove the 2 year yield up 27 basis points to 1.79% and the 10 year yield up 35 basis points to 1.90%. A stronger than expected 0.3% increase in core CPI for August further pressured Treasury yields.

Contributing to the improved outlook for trade included a series of positive sounding trade developments. President Trump said he will delay the tariff rate increase on $250 billion of Chinese imports to Oct. 15 from Oct. 1 at China's request. China exempted certain U.S. products from a higher tariff rate, including pork and soybeans. Late in the week President Trump said he would at least consider an interim trade deal.

From a growth perspective, economic data continued to suggest the U.S. consumer could continue to support growth and ward off a recession. For instance, weekly initial jobless claims remained at historically low levels, retail sales increased 0.4% in August, and consumer sentiment rebounded in September.

Mario Draghi’s announcement of more accommodative measures were another boost for equities last week. The ECB cut its deposit rate to -0.5% from -0.4% and said it will restart buying back bonds at a monthly pace of €20 billion euros, a process known as quantitative easing, starting Nov. 1.

In other markets the U.S. Dollar Index declined 0.2% to 98.20. WTI crude fell 2.8% last week to $54.88 a barrel, as a series of bearish news event rattled the oil markets. President Trump was reportedly in talks to ease sanctions on Iran. OPEC downgraded its forecasts for oil demand in 2019 and 2020 and the ECB lowered its eurozone growth forecasts for 2019 and 2020.

September 9 – September 13 Economic Calendar