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Weekly Market Update — April 8, 2019

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S&P 500 HITS 2019 HIGH AS MARKETS HAVE A LOT TO BE THANKFUL FOR

  • Stocks were up around the globe, with the S&P 500 garnering all the attention as it rose for seven straight sessions and finished the week on a yearly high
  • The S&P 500 leapt 2.1%, the DJIA gained 1.9%, NASDAQ jumped 2.7%, and the smaller-cap Russell 2000 outpaced them all with a gain of 2.8%
  • Of the S&P 500 sectors, Materials (+4.3%), Financials (+3.3%), and Consumer Discretionary (+3.2%) led the charge, while the more defensive Consumer Staples (-1.0%) and Utilities (-0.2%) lagged
  • Investors felt good this week, as news of positive U.S. and China trade talks, expansive manufacturing data and a Jobs Report that was received as “not too hot and not too cold” pushed the markets in an upward trend all week
  • U.S. and China trade talks dominated the news as tidbits of progress kept leaking out of Washington and President Trump suggested that a deal could be reached within four weeks or so
  • The Department of Labor’s release of the Employment Situation Report for March showed a rebound in job growth, muted inflation and, most importantly, suggested that last month’s weak payroll numbers were more of an outlier than a trend
  • The 2-yr yield increased seven basis points to 2.34% and the 10-yr yield increased nine basis points to 2.50%
  • WTI crude rose 4.9% to $63.10/barrel, a five-month high

Weekly Market Performance

Manufacturing Data Fuels Markets

Stocks advanced 7 days in a row, driven in part by better–than–expected manufacturing activity. According to the latest Manufacturing ISM Report on Business:

“Economic activity in the manufacturing sector expanded in March, and the overall economy grew for the 119th consecutive month.”

Further, the Report stated that:

  • Manufacturing expanded in March, as the PMI registered 55.3 percent, an increase of 1.1 percentage points from the February reading of 54.2 percent.
  • A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

U.S. and China Appear to be Closer to an Agreement

The markets quietly rejoiced in the news out of Washington that suggests that the U.S. and China might be close to resolving their trade dispute that has dragged on for the past year.

Speaking from the Oval Office, the President described a possible trade agreement as “the granddaddy of them all” and “very monumental.”

Trump further suggested that an agreement could be announced “within the next four weeks or maybe less, or maybe more, whatever it takes.”

Another Goldilocks Jobs Report

The Department of Labor released the Jobs Report on Friday and the markets cheered for a lot of data as the DOL reported that:

  • The number of jobs created rebounded strongly to 196,000 jobs in March from a revised 33,000 in February, bringing the three–month average of jobs created to a robust 180,000
  • The unemployment rate remained at 3.8% in March, which is near the 50–year low
  • The number of unemployed persons was essentially unchanged at 6.2 million
  • The pace of wage growth edged down slightly to 3.2% from the 3.4% posted in February, which was a record for the 10–year expansion
  • The Fed’s preferred inflation measure fell to 1.4% year–over–year in January from 1.8% the previous month

Further data from the DOL showed that:

  • Among the major worker groups, the unemployment rates for adult men (3.6 percent), adult women (3.3 percent), teenagers (12.8 percent), Whites (3.4 percent), Blacks (6.7 percent), Asians (3.1 percent), and Hispanics (4.7 percent) showed little or no change in March.
  • In March, the number of long–term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 1.3 million and accounted for 21.1 percent of the unemployed.
  • The labor force participation rate, at 63.0 percent, was little changed over the month and has shown little movement on net over the past 12 months.
  • The employment–population ratio was 60.6 percent in March and has been either 60.6 percent or 60.7 percent since October 2018.





Sources

instituteforsupplymanagement.orgstandardandpoors.combls.govcommerce.govsec.gov;
federalreserve.govdol.govmsci.comnasdaq.comdowjones.commorningstar.com;
edwardjones.combloomberg.com



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