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Weekly Market Update for November 22, 2019

by JM Hanley

The Dow was up on Friday, rising 109 points to close at 27,876. For the week, the Dow was down 0.5% (SP500 -0.3%) and year-to-date is now up 19.5% (SP500 +24.1%). The yield on the 10-year Treasury (an important interest-rate indicator) fell six basis points, closing at 1.77%. The price of crude oil was unchanged this week at $58 a barrel – up 28% YTD.

China trade deal headlines came fast and furious this week, but as the week ends the situation is little changed. China was unhappy with legislation passed by Congress that affirmed American support for protestors in Hong Kong. Beijing encouraged the President to veto it. The US Chamber of Commerce, noting the glacial pace of negotiations thus far, predicted that signing the first phase of a deal may slip into the New Year. Beijing and Washington were both at pains to deny that possibility. In other political news, passage of the NAFTA rewrite may now slip into next year. It had originally been expected to receive an (affirmative) vote in Congress this month.

Weekly domestic data was mostly positive. A survey of manufacturers came in slightly better than expected, as did its equivalent for the service sector. New orders and employment were both better than expected, a positive sign. Consumer sentiment, which has sustained economic growth as other areas of the economy have faltered, was also better than forecast. The Fed’s rate-cutting activities also seem to have pushed up long-term inflation expectations. News from Europe was less encouraging. A survey of industry and the service sector was near lows reached in September – consistent with GDP growth of just 0.8% – though Germany and France did well. Political tensions in Spain may be to blame. However, manufacturing (long a sore spot) showed some hopeful glimmers. Additionally, European consumer confidence proved resilient.

Shares of Lowe’s rose this week after the home improvement retailer reported a strong third quarter. Sales were better than feared after weak earnings at peer Home Depot. Profit margins also climbed from last quarter. Execution of the new CEO’s turnaround plan continues. The firm reduced senior management and culled stores in its underperforming Canadian division. Loyalty programs targeted at home improvement professionals have been augmented, and an outdated online sales platform is scheduled for an upgrade.

Our offices will be closed next Thursday in observance of Thanksgiving. Highlights on the economic calendar include a speech by Jerome Powell in Rhode Island on Monday, personal consumption expenditures (on Wednesday), and a second estimate of third quarter GDP on Wednesday.

*The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Clients or prospective clients should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All clients are strongly urged to consult with their tax advisors regarding any potential investment. Past performance does not guarantee future results; there is always a possibility of loss.

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