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Weekly Market Update for January 24, 2020

by JM Hanley

The Dow was down on Friday, falling 170 points to close at 28,990. For the week, the Dow was down 1.2% (SP500 -1.0%) and year-to-date is now up 1.6% (SP500 +2.0%). The yield on the 10-year Treasury (an important interest-rate indicator) fell fourteen basis points, closing at 1.69%. The price of crude oil was down 8% this week to $54 a barrel – down 11% YTD.

Just as the ink has dried on Phase One of the trade agreement, investors have found themselves confronting another China concern: an outbreak of coronavirus in the central Chinese city of Wuhan. A great deal about the situation remains uncertain, and market reaction tends to be speculative. Medical technology has improved since the 2003 outbreak of SARS (the obvious comparison), and government communication with the public has thus far been better as well. But mass transport within China has been expanded significantly in the past seventeen years – in fact, Wuhan is a major hub for high-speed rail – which could make it more difficult to contain the outbreak. Airlines, cruise lines, hotels, casinos, luxury retail and other sectors exposed to China suffered this week as a result.

Economic data was light in this holiday-shortened week. Existing home sales rose last month, considerably more than anticipated. A reading on US manufacturing was weaker than expected. That contrasts with Europe, where the industrial economy regained its footing and a measure of German economic conditions evinced further signs of improvement.

A little over eleven percent of S&P 500 companies have reported earnings so far, according to Yardeni Research. Earnings, expected to be flat from last year, have done about four percent better than that. Revenues have grown about three and a half percent, modestly better than expected.

No portfolio companies reported earnings this week. Visa, Facebook, Amazon, Alibaba, and EA, among others, will report earnings next week. Otherwise, investor attention will be focused on the Federal Reserve’s mid-week meeting. No action on interest rates is expected but members’ commentary could be market-moving.

*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.