U.S. MARKETS UP SOLIDLY FOR SECOND WEEK IN A ROW, BUT INTERNATIONAL MARKETS PERFORM EVEN BETTER
- The U.S. equity markets ended green for the second week in a row, encouraged by no deterioration in U.S./China relations and encouraging economic data
- The S&P 500 and NASDAQ both moved up 1.8% and the DJIA gained 1.5%
- The smaller cap Russell 2000 lagged, but still moved up 0.7% on the week
- Markets overseas performed even better as the broad–based, developed international markets, as measured by MSCI EAFE Index, jumped 2.7%
- Of the S&P 500 sectors, Consumer Discretionary and Energy led the way with jumps of 2.6% each, followed by Information Technology which moved up 2.4%
- All 11 S&P 500 sectors ended the week green
- Employment numbers were released and showed that nonfarm payrolls increased by 130,000, which was a bit lower than consensus estimates, but still consistent with a healthy job market
- The 2–year Treasury yield ended the week at 1.52% and the 10–year Treasury yield ended at 1.55%
- The U.S. Dollar Index fell 0.5% to 98.42
- WTI crude rose 2.5% to $56.45/barrel as U.S. inventories dropped
Weekly Market Performance
No Bad News About U.S. and China Dispute Encourages Investors
U.S. stock markets recorded their second consecutive week of solid gains, as investors were optimistic that progress is occurring between the U.S. and China over tariffs. While nothing new was announced, it was more that there was no negative news that seemed to encourage investors that the trade dispute will be resolved soon.
The large–cap S&P 500 jumped almost 2% and is now within about 2% of its record high from July 26th. Despite the shortened trading week due to markets being closed on Monday for Labor Day, trading volume picked up noticeably as Wall Street returned from summer vacations. Despite the uptick in trading volume, however, volatility – as measured by the CBOE Volatility Index – fell to its lowest level since late July.
Within the S&P 500 sectors, the Energy sector outperformed for a change, driven by rising oil prices which were in turn driven by falling U.S. inventories and news from Iran that it was scaling back.
Generally Positive Economic Data
The markets also reacted this week to favorable economic data; namely, jobs and manufacturing.
U.S. productivity increased more than consensus estimates in the second quarter and factory orders were up 1.4% in July, which is their best gain in about a year.
The not-so-great data, however, showed that the ISM’s gauge of manufacturing activity slipped into negative territory last month for the first time in about two years.
In terms of jobs, overall the U.S. economy added 130,000 jobs, but many were expecting gains between 160,000 and 170,000, so a few news outlets reported a mixed job report. Average hourly earnings rose 0.4% in the month.
Outside the U.S.
- European markets experienced one of the best weeks in a long time and the pan–European STOXX Europe 600 Index rose almost 2%
- The British pound gained more than 1% against the U.S. dollar and the FTSE 100 rose 1.25%
- Japanese stocks rose during the week as the Nikkei 225 Stock Average closed up almost 2.4% and the large–cap TOPIX Index gained almost 1.7%
- China’s benchmark stock index posted its best weekly performance in some time as the Shanghai Composite Index and the large-cap CSI 300 Index both gained close to 4.0% on the week
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federalreserve.gov;msci.com;nasdaq.com; dowjones.com; morningstar.com; edwardjones.com; bloomberg.com
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