In this week’s recap: stocks rally, China schedules tariff cuts, January hiring tops expectations, and a key gauge of manufacturing activity improves.
Weekly Economic Update
Presented by William Mauro, February 10, 2020
THE WEEK ON WALL STREET
Stocks advanced four days out of five during the past market week, erasing the losses of the week before.
The Nasdaq Composite surged 4.04%, the S&P 500 3.17%, and the Dow Jones Industrial Average 3.00%. Foreign stocks also rallied: the MSCI EAFE index added 2.21%.1,2
China Plans to Halve Some Tariffs
Thursday, investors woke up to the news that China would be lowering import taxes on about $75 billion of U.S. products. Later this week, a set of 10% tariffs is slated to drop to 5%, and a group of 5% tariffs is scheduled to fall to 2.5%.
This reduction is part of the phase-one trade deal that China agreed to last month, a pact which may be a step toward a trade truce with the U.S.3
January’s Net Job Gain: 225,000
The Department of Labor’s latest employment report exceeded expectations. Economists surveyed by Bloomberg projected 165,000 net new hires last month. The main jobless rate ticked north to 3.6%; the U-6 rate including the underemployed rose 0.2% to 6.9%.
This upside surprise points to ongoing strength in the economy. Stocks declined Friday after the report’s release, however, as traders viewing the data saw less reason for a Federal Reserve rate cut in the near future.4
A Manufacturing Positive
The U.S. factory sector grew last month, for the first time since July. The Institute for Supply Management’s purchasing managers index for the manufacturing sector, which traders view as a fundamental economic indicator, came in at 50.9 in January; any reading above 50 indicates sector expansion.5
WHAT’s AHEAD
Investors should note that U.S. stock and bond markets will be closed on Monday, February 17 for Presidents Day.
T I PÂ Â O FÂ Â T H EÂ Â W E E K
By continuously reviewing your business budget, you can pinpoint how well your company is following its financial objectives throughout the year.
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THE WEEK AHEAD: KEY ECONOMIC DATA
Tuesday: Federal Reserve chairman Jerome Powell begins two days of testimony in Congress on U.S. monetary policy.
Thursday: The federal government’s January Consumer Price Index, measuring monthly and yearly inflation.
Friday: January retail sales data from the Census Bureau, and the University of Michigan’s preliminary February consumer sentiment index, an evaluation of consumer confidence levels.
Source: MarketWatch, February 7, 2020
The MarketWatch economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
THE WEEK AHEAD: COMPANIES REPORTING EARNINGS
Monday: Allergan (AGN), RingCentral (RNG)
Tuesday: Exelon (EXC), Hilton Worldwide Holdings (HLT)
Wednesday: CME Group (CME), Cisco (CSCO), CVS Health (CVS), Shopify (SHOP)
Thursday: Alibaba (BABA), Nvidia (NVDA), PepsiCo (PEP)
Friday: AstraZeneca (ABBV), Enbridge (ENB)
Source: Zacks.com, February 7, 2020
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
Q U O T EÂ Â O FÂ Â T H EÂ Â W E E K
“We always admire the other person more after we’ve tried to do his job.â€
WILLIAM FEATHER
You can rest on my pad without touching the keys. I will sing all month long as long as you pay your fees. What am I?
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LAST WEEK’S RIDDLE: There is a word for a place in Europe, a place where many travelers like to go. But, if you take the first letter of this word and put it at the end of the other four letters in the word, you have something no one likes. What is this word?
ANSWER: Spain (Pains).
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The MSCI EAFE Index is a stock market index that is designed to measure the equity market performance of developed markets outside of the U.S. and Canada. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSEâ€) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.
CITATIONS:
1 – wsj.com/market-data [2/7/20]
2 – quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices [2/7/20]
3 – cnn.com/2020/02/06/economy/china-tariffs-coronavirus/index.html [2/6/20]
4 – tinyurl.com/utpxrzd [2/7/20]
5 – ycharts.com/indicators/us_pmi [2/6/20]
CHART CITATIONS:
wsj.com/market-data [2/7/20]
quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices [2/7/20]
quotes.wsj.com/index/SPX/historical-prices [2/7/20]
treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [2/7/20]