U.S. – China Trade Talk Optimism Pushes Stocks Higher
Sources: Sources for data in tables: Equity Market and Fixed Income returns are from JP Morgan as of 02/15/19. Rates and Economic Calendar Data from Bloomberg as of 02/18/19. International developed markets measured by the MSCI EAFE Index, emerging markets measured by the MSCI EM Index. Sector performance is measured using GICS methodology.
U.S. equities continued their 2019 ascent last week. The Dow Jones Industrial Average and S&P 500 Index advanced 3.21% and 2.56% respectively for the week. Those returns mark the eighth consecutive weekly gain for the Dow and gains in seven out of the last eight weeks for the S&P 500 Index. U.S. Small Cap stocks, as measured by the Russell 2000 Index, continued to lead the way in 2019 posting a positive 4.22% return. The group is up 16.52% year-to-date. Looking overseas, international equities were mixed between developed and emerging markets with a 2.04% gain and a 0.49% loss respectively. Finally, the 10-year U.S. Treasury continued to trade in a tight range this year closing the week with a 2.66% yield.
During the week we continued to see our fair share of positive and negative signals. Global economic growth continues to be a concern as the U.K.’s economic growth weakened, industrial production in the Eurozone fell more than anticipated in December, and U.S. retail sales dropped in December. Despite these headwinds, the market was resilient thanks to optimism throughout the week regarding U.S. and China trade negotiations. Negotiations will continue this week back in Washington D.C. though no near-term, final agreement is expected at this time.
Markets reopened this week on Tuesday after the long President’s Day weekend. Stocks struggled to find direction during early trading as investors looked to balance any trade/tariff news with additional corporate earnings reports. With respect to the latter, Walmart shares jumped as the large retailer beat analyst Q4 expectations on both the top and bottom lines, hinting that the U.S. consumer is still in pretty good shape.
Given all of the uncertainties facing investors across the globe, asset allocation, diversification, and adherence to a longer term, customized financial plan will be critical in the months and years ahead. We encourage investors to stay disciplined and work with experienced financial professionals to help manage their portfolios through various market cycles within an appropriately diversified framework that is consistent with their objectives, time-frame and tolerance for risk.
Disclosures: Past performance does not guarantee future results. We have taken this information from sources that we believe to be reliable and accurate. Hennion & Walsh cannot guarantee the accuracy of said information and cannot be held liable. This information is provided for informational purposes only and is not a solicitation to buy or sell any of the asset classes or sectors discussed.
Investing in foreign securities presents certain risks not associated with domestic investments, such as currency fluctuation, political and economic instability, and different accounting standards. This may result in greater share price volatility. These risks are heightened in emerging markets.
There are special risks associated with an investment in real estate, including credit risk, interest rate fluctuations and the impact of varied economic conditions. Distributions from REIT investments are taxed at the owner’s tax bracket.
The prices of small company and mid cap stocks are generally more volatile than large company stocks. They often involve higher risks because smaller companies may lack the management expertise, financial resources, product diversification and competitive strengths to endure adverse economic conditions.
Investing in commodities is not suitable for all investors. Exposure to the commodities markets may subject an investment to greater share price volatility than an investment in traditional equity or debt securities. Investments in commodities may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity.
Products that invest in commodities may employ more complex strategies which may expose investors to additional risks.
Investing in fixed income securities involves certain risks such as market risk if sold prior to maturity and credit risk especially if investing in high yield bonds, which have lower ratings and are subject to greater volatility. All fixed income investments may be worth less than original cost upon redemption or maturity. Bond Prices fluctuate inversely to changes in interest rates. Therefore, a general rise in interest rates can result in the decline of the value of your investment.
MSCI- EAFE: The Morgan Stanley Capital International Europe, Australasia and Far East Index, a free float-adjusted market capitalization index that is designed to measure developed-market equity performance, excluding the United States and Canada.
MSCI-Emerging Markets: The Morgan Stanley Capital International Emerging Market Index, is a free float-adjusted market capitalization index that is designed to measure the performance of global emerging markets of about 25 emerging economies.
Russell 3000: The Russell 3000 measures the performance of the 3000 largest US companies based on total market capitalization and represents about 98% of the investible US Equity market.
ML BOFA US Corp Mstr [Merill Lynch US Corporate Master]: The Merrill Lynch Corporate Master Market Index is a statistical composite tracking the performance of the entire US corporate bond market over time.
ML Muni Master [Merill Lynch US Corporate Master]: The Merrill Lynch Municipal Bond Master Index is a broad measure of the municipal fixed income market.
Investors cannot directly purchase any index.
LIBOR, London Interbank Offered Rate, is the rate of interest at which banks offer to lend money to one another in the wholesale money markets in London.
The Dow Jones Industrial Average is an unweighted index of 30 “blue-chip” industrial U.S. stocks.
The S&P Midcap 400 Index is a capitalization-weighted index measuring the performance of the mid-range sector of the U.S. stock market, and represents approximately 7% of the total market value of U.S. equities. Companies in the Index fall between S&P 500 Index and the S&P SmallCap 600 Index in size: between $1-4 billion.
DJ Equity REIT Index represents all publicly traded real estate investment trusts in the Dow Jones U.S. stock universe classified as Equity REITs according to the S&P Dow Jones Indices REIT Industry Classification Hierarchy. These companies are REITs that primarily own and operate income-producing real estate.