Broker Check

December 23, 2019 - Seasonal Lift

| December 23, 2019
Share |

U.S. stocks rose again this week, with the S&P 500 Index gaining for the 10th week out of 11 and setting more  record highs. Trade talks with China continued to move forward, buoying sentiment; the “phase one” trade pact between the United States and China is expected to be signed in January. Stocks were unaffected by impeachment proceedings in the U.S. House in what was a fairly slow week for macromarket-moving news. Stocks also may have benefited from seasonal tailwinds.

Economic data mostly exceeded expectations and continued to reflect steady economic growth. Homebuilder  sentiment from the National Association of Homebuilders was particularly strong as the NAHB Market Index reached a 20-year high. Other data points that beat expectations included the Markit U.S. Purchasing Managers’ Index (PMI) for the services sector and several reports on housing. Jobless claims dipped 18,000 to 234,000, reversing some of  the impact of the Thanksgiving-holiday calendar quirk the previous week.

Global stocks rose last week, led by emerging markets. The MSCI EAFE Index of developed market stocks rose 0.4% through Thursday, led by France and the United Kingdom (U.K.). The MSCI Emerging Markets Index gained nearly 2% over the first four days of the week, led by Brazil, South Korea, and Taiwan.

The Russell 2000 Index of small cap stocks outpaced the large cap stock benchmarks as investors embraced risk. The growth style of investing outpaced value on strength in communication services and technology. Value was weighed down by a lagging financials sector.

U.S. fixed income slid as stocks moved higher. The 10-year U.S. Treasury yield climbed to a six-week high, and the spread between the 2-year and 10-year yields climbed to a 13-month high. The Bloomberg Barclays U.S. Aggregate Index fell through Thursday, poised for its biggest weekly loss in six weeks. International sovereign debt was the worst-performing sector, while credit-sensitive fixed income outperformed, led by high-yield corporate bonds and emerging-markets debt.

The U.S. dollar moved higher on the week, its first weekly gain in December, as U.K. Prime Minister Boris Johnson’s move to limit the Brexit transition period sent the British pound to its worst day in more than a year on Tuesday.

Gold has little changed on the week and traded within a 1% range near $1,475 per ounce. Oil rose above $60 per barrel for the first time since May 2019 and is poised for its best December monthly gain since 2002.

Next week, the U.S. economic calendar is sparse as 2019 winds down. A new home sales report is due out on Monday, followed by durable goods orders Tuesday and initial jobless claims on Thursday. The stock market will close early December 24 and will be closed December 25.

Internationally, key data points include retail sales, employment, and industrial production data for Japan and China’s industrial profits on Thursday. German retail sales is slated for Friday.

###

IMPORTANT DISCLOSURES:

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance the products or strategies discussed are suitable for all investors or will yield positive outcomes. All performance referenced is historical and is no guarantee of future results. The economic forecasts set may not develop as predicted.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. Sector data is represented by S&P 500 GICS sub-indexes.

Because of its narrow focus, specialty sector investing, such as healthcare, financials, or energy, will be subject to  greater volatility than investing more broadly across many sectors and companies.

U.S. Treasuries may be considered “safe haven” investments but do carry some degree of risk including interest rate, credit, and market risk. They are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

For a list of descriptions of the indexes referenced in this publication, please visit our website at lplresearch.com/definitions.

This research material has been prepared by LPL Financial LLC.

Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL is not an affiliate of and makes no representation with respect to such entity.

If your advisor is located at a bank or credit union, please note that the bank/credit union is not registered as a broker-dealer or investment advisor. Registered representatives of LPL may also be employees of the bank/credit union. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, the bank/credit union. Securities and insurance offered through LPL or its affiliates are:

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Guaranteed |
Not Bank/Credit Union Deposits or Obligations | May Lose Value

Tracking # 1-930250

Share |