U.S. stocks rallied for the sixth consecutive week, notching more new record highs along the way. Late week optimism surrounding trade provided most of the spark, as lead U.S. negotiators expressed confidence a “phase one” trade agreement with China could be reached soon. The S&P 500 has not dropped two consecutive days since October 7–8.
Economic data showed that consumers continue to spend, buoying healthy inflationary pressures and growth. The Consumer Price Index (CPI), which excludes food and energy prices, rose 2.3% year over year in October, slightly lower than September’s cycle-high 2.4% growth. Producer price growth continued to wane, but it has yet to materially weigh on companies’ end-pricing power. Retail sales rose a better-than-expected 0.3% in October, the measure’s seventh gain in eight months.
International data was mixed with Japan’s gross domestic product (GDP) unexpectedly slowing sharply while Germany narrowly avoided recession with 0.1% GDP growth in the third quarter.
Global stocks lagged behind domestic stocks last week despite optimism on trade and recent signs of stabilization in global economic growth. Emerging markets stocks lost ground on losses in Chinese stocks despite trade optimism. Losses in Japan weighed on the international developed stock market index.
Growth stocks outperformed value while small cap stocks lagged behind large caps, a return to 2019 trends. Falling interest rates boosted real estate and utilities while weighing on financials. Growth oriented communication services, healthcare, and technology also performed well. Energy fell despite a slight rise in crude oil prices.
U.S. fixed income climbed and the 10-year U.S. Treasury yield fell from a three-month high amid a mixed bag of trade headlines midweek and falling yields internationally. Benign U.S. inflation data was expected and had little impact on bond yields. The Bloomberg Barclays U.S. Aggregate Index rose 0.6%, led by gains in investment-grade corporate bonds and Treasuries. All major fixed income sectors we track finished the week higher, though high-yield corporate bonds needed Friday’s rally to get there.
The U.S. dollar edged lower on the week, while commodities were broadly mixed with precious metals outperforming industrial metals. Gold garnered support from a weaker dollar and lower interest rates, moving higher following last week’s 3.7% slide. China-sensitive copper prices fell the most since September, consistent with weekly losses in Chinese stocks. It was a quiet week for oil, which hovered around $57 per barrel for the second consecutive week.
Next week, investors in the United States will get housing data, minutes from the last Federal Reserve policy meeting, the Conference Board’s Leading Economic Index (LEI), consumer confidence, and the Markit Services and Manufacturing purchasing managers’ index (PMI) surveys. Finally, another 15 S&P 500 components will report earnings next week as third-quarter earnings season wraps up.
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.
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 # 1-917754