In this week’s recap: stock and commodity traders turn cautious as the coronavirus reaches America; home sales increase even with the current housing market’s slim inventory.

Weekly Economic Update

Presented by Cornerstone Financial Advisory, January 27, 2020

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THE WEEK ON WALL STREET

Stock prices fell last week as investors considered the potential health and economic risks of the flu-like coronavirus.
Foreign stock markets, as tracked by the broad MSCI EAFE index, fell 1.03% for the week. Coincidentally, the S&P 500 lost exactly that much across a 4-day Wall Street trading week. The Dow Jones Industrial Average declined 1.22%, the Nasdaq Composite 0.79%.1,2

FUTURES MARKETS EYE CORONAVIRUS OUTBREAK

By Friday’s closing bell, two cases of coronavirus had been confirmed in the U.S. by the Centers for Disease Control and Prevention. Sixty-three other potential cases were being monitored. Twenty-six people had died from the virus in China, where more than 30 million people faced travel restrictions.
This news exerted a drag on stocks in multiple industries. Oil prices also slipped: West Texas Intermediate crude lost 7.4% for the week to settle at $54.19 Friday. Stock and commodity traders wondered if the virus would mimic the SARS scare of 2002-03, which kept Chinese workers and shoppers at home and hurt corporate earnings worldwide.3,4

FEWEST HOMES FOR SALE IN 20 YEARS

Existing home sales improved 3.6% in December, according to the National Association of Realtors. This happened even as the number of listed properties hit a 20-year low. The NAR says that the rate of total U.S. home sales (existing and new) increased 10.8% in 2019.5

WHAT’S AHEAD

Traders will watch not only earnings and economic indicators this week, but also the Federal Reserve, which meets Tuesday and Wednesday. Will the central bank’s latest monetary policy statement reveal any subtle change of outlook?

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T I P O F T H E W E E K

If you make your retirement money hard to reach, you may be doing yourself a favor. Tax-advantaged retirement accounts have rules that help to discourage early withdrawals. Those rules are designed with your future self in mind, and they exist to make you think twice about tapping such accounts for current needs.

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THE WEEK AHEAD: KEY ECONOMIC DATA

Monday: The Census Bureau’s report on December new home sales.
Tuesday: The latest consumer confidence index from the Conference Board.
Wednesday: A monetary policy announcement from the Federal Reserve, followed by a press conference with Fed chair Jerome Powell.
Thursday: The first estimate of fourth-quarter gross domestic product from the Bureau of Economic Analysis.
Friday: December consumer spending figures from the Department of Commerce, plus the final January University of Michigan consumer sentiment index (a gauge of consumer confidence levels).

Source: MarketWatch, January 24, 2020
The MarketWatch economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Monday: D.R. Horton (DHI), Sprint (S)
Tuesday: Apple (AAPL), Pfizer (PFE), SAP (SAP), United Technologies (UTX)
Wednesday: AT&T (T), Facebook (FB), Mastercard (MA), Microsoft (MSFT)
Thursday: Amazon (AMZN), Coca-Cola (KO), Verizon (VZ), Visa (V)
Friday: Chevron (CVX), ExxonMobil (XOM), Honeywell International (HON)

Source: Zacks.com, January 24, 2020
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

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Q U O T E O F T H E W E E K

“It’s not the things we do in life that we regret on our death bed, it is the things we do not.”
RANDY PAUSCH

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T H E W E E K L Y R I D D L E

I’m a word some use to measure bits of time, but you won’t find me on a clock or anything that chimes. I will never fit upon a clock face, but I am used to identify a place. What word am I?

LAST WEEK’S RIDDLE: Travel a mile, and I will change. Travel a million miles, and I might be incapable of further change. What am I?
ANSWER: An odometer.

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This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The MSCI EAFE Index is a stock market index that is designed to measure the equity market performance of developed markets outside of the U.S. and Canada. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:
1 – wsj.com/market-data [1/24/20]
2 – quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices [1/24/20]
3 – cnbc.com/2020/01/24/cdc-confirms-second-us-case-of-coronavirus-chicago-resident-diagnosed.html [1/24/20]
4 – cnbc.com/2020/01/24/coronavirus-fear-hits-oil-prices-drop-most-since-may.html [1/24/20]
5 – marketwatch.com/story/existing-home-sales-rebounded-in-december-but-extraordinarily-lean-inventories-are-a-growing-concern-2020-01-22 [1/22/20]

CHART CITATIONS:
wsj.com/market-data [1/24/20]
quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices [1/24/20]
quotes.wsj.com/index/SPX/historical-prices [1/24/20]
treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [1/24/20]

In this week’s recap: U.S. equity benchmarks hit fresh record highs; one trade deal is signed, and Congress approves another; builders break ground on more residential projects.

Weekly Economic Update

Presented by Cornerstone Financial Advisory, January 20, 2020

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THE WEEK ON WALL STREET

Traders were in an upbeat mood last week, reacting to news out of Washington: the signing of the phase-one trade deal between the U.S. and China as well as the Senate passage of the U.S.-Mexico-Canada Agreement (USMCA). In addition, a new earnings season started. Risk appetite grew and spurred all three of the major Wall Street averages to record settlements on Friday.¹

For the week, the Nasdaq Composite rose 2.29%; the S&P 500, 1.97%; the Dow Jones Industrial Average, 1.82%. International stocks improved 0.40%, according to MSCI’s EAFE index.^2,3

 

Progress on the Trade Front

President Donald Trump and Chinese Vice Premier Liu He signed off on a new, partial U.S.-China trade pact Wednesday. In this deal, China agrees to buy at least $200 billion more of American products, crops, and energy futures over a 2-year period, and it must submit an “action plan” by mid-February, detailing how it will better protect American intellectual property and cut counterfeiting of American goods. The U.S. agrees to halve 15% tariffs on $120 billion of Chinese imports (other tariffs slated for last December were scrapped earlier as part of this agreement).

As for the USMCA, President Trump is expected to sign it into law this week. It was passed 89-10 in the Senate on Thursday, and by a wide margin in the House of Representatives in December. Mexico’s government has also approved the USMCA; Canada’s government has yet to do so.^4,5

 

Homebuilding Picks Up

The Census Bureau reported a 16.9% surge in housing starts in December. This surpassed expectations; housing market analysts, surveyed by Refinitiv, had expected no increase.¹

 

What’s AHEAD

U.S. stock markets are closed Monday, in observance of Martin Luther King Jr. Day. Post offices and Social Security offices will also be closed Monday as well as most banks.

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T I P   O F   T H E   W E E K

A retirement relocation to a cheaper metro area may cost you money in the short run, but you might see considerable long-term savings from such a move.

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THE WEEK AHEAD: KEY ECONOMIC DATA

Wednesday: December existing home sales figures from the National Association of Realtors.

Source: MarketWatch, January 17, 2020

The MarketWatch economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: Capital One (COF), Netflix (NLFX), TD Ameritrade (AMTD), United Airlines (UAL)

Wednesday: Abbott Labs (ABT), Johnson & Johnson (JNJ), Texas Instruments (TXN)

Thursday: Comcast (CMCSA), Intel (INTC), Procter & Gamble (PG), Union Pacific (UNP)

Friday: American Express (AXP), Nextera Energy (NEE)

Source: Zacks, January 17, 2020

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

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Q U O T E   O F   T H E   W E E K

“A joyful life is an individual creation that cannot be copied from a recipe.”

Mihaly Csikszentmihalyi

 

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T H E   W E E K L Y   R I D D L E

Travel a mile, and I will change. Travel a million miles, and I might be incapable of further change. What am I?

 

LAST WEEK’S RIDDLE: I can be used to build castles, but I crumble in your hands. I can help a man see, and am found all around the lands. What am I?

ANSWER: Sand.

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This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The MSCI EAFE Index is a stock market index that is designed to measure the equity market performance of developed markets outside of the U.S. and Canada. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

1 – foxbusiness.com/markets/us-stocks-jan-17-2020 [1/17/20]

2 – wsj.com/market-data [1/17/20]

3 – quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices [1/17/20]

4 – cnbc.com/2020/01/15/trump-and-china-sign-phase-one-trade-agreement.html [1/16/20]

5 – washingtonpost.com/us-policy/2020/01/16/senate-approves-new-usmca-trade-deal-with-canada-mexico/ [1/16/20]

 

CHART CITATIONS:

wsj.com/market-data [1/17/20]

quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices [1/17/20]

quotes.wsj.com/index/SPX/historical-prices [1/17/20]

treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [1/17/20]

 

In this week’s recap: Stocks end up higher and oil ends up lower after an up-and-down week, as traders react to events in the Middle East and the data in the December unemployment report.

Weekly Economic Update

Presented by  Cornerstone Financial Advisory, January 13, 2020

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THE WEEK ON WALL STREET

The market had a choppy five days, with traders reacting to geopolitical developments and weaker-than-expected jobs data. Even so, the three major U.S. equity indices posted weekly gains and continued their strong start to the new year. During Friday’s trading session, the Dow Jones Industrial Average topped 29,000 for the first time.

Rising 1.75% for the week, the Nasdaq Composite outgained both the Dow (up 0.66%) and the S&P 500 (up 0.94%). The story for foreign stocks was different: the MSCI EAFE index declined 0.30%.^1,2

 

Holiday Hiring Numbers

Wall Street was unimpressed by the latest jobs report from the Department of Labor. Employers added 145,000 net new workers in December; economists surveyed by Dow Jones had forecast a gain of 160,000. Wages grew less than 3% year-over-year for the first time in 17 months.

Unemployment remained at a 50-year low of 3.5%, however. The broader U-6 jobless rate, which also includes the underemployed, decreased to 6.7%, the lowest in 26 years of recordkeeping.³

 

Oil Prices Decline

The rally in crude oil spurred by strained U.S.-Iran relations ebbed this past week. At Friday’s closing bell, WTI crude was worth $59.04 a barrel on the New York Mercantile Exchange, down 6.36% for the week and 3.31% year-to-date.⁴

 

What’s AHEAD

A new earnings season starts Tuesday, with big banks leading off and reporting fourth-quarter results. Chinese Vice Premier Liu He will be in Washington, D.C., through Wednesday, and during his visit, he and President Trump are expected to sign the phase-one trade deal between the U.S. and China.⁵

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T I P   O F   T H E   W E E K

When it comes to naming an executor for your estate, a family member or relative is not your only option. You can also name an attorney or a corporate trustee as your executor.

 

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THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: The December Consumer Price Index, providing a look at inflation last month and for all of 2019.

Thursday: December retail sales figures from the Department of Commerce.

Friday: The University of Michigan’s preliminary January Consumer Sentiment Index, assessing consumer confidence levels from multiple angles.

Source: MarketWatch, January 10, 2020

The MarketWatch economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: Citigroup (C), Delta Air Lines (DAL), JPMorgan Chase (JPM), Wells Fargo (WFC)

Wednesday: Bank of America (BAC), Goldman Sachs (GS), United Health (UNH), US Bancorp (USB)

Thursday: Morgan Stanley (MS)

Friday: Schlumberger (SLB)

Source: Zacks, January 10, 2020

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

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Q U O T E   O F   T H E   W E E K

“The man who says he is willing to meet you halfway is usually a poor judge of distance.”

LAURENCE J. PETER

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T H E   W E E K L Y   R I D D L E

I can be used to build castles, but I crumble in your hands. I can help a man see, and am found all around the lands. What am I?

 

LAST WEEK’S RIDDLE: A couple took a trip to the Arctic Circle, and they were disappointed that they did not see any penguins. What didn’t they realize about penguins?

ANSWER: They did not realize that almost all penguins live in the Southern Hemisphere.

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This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The MSCI EAFE Index is a stock market index that is designed to measure the equity market performance of developed markets outside of the U.S. and Canada. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

1 – wsj.com/market-data [1/10/20]

2 – quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices [1/10/20]

3 – cnbc.com/2020/01/10/us-nonfarm-payrolls-december-2019.html [1/10/20]

4 – marketwatch.com/investing/future/crude%20oil%20-%20electronic [12/3/20]

5 – cnbc.com/2020/01/09/chinas-vice-premier-liu-to-sign-us-trade-deal-in-washington-next-week.html [1/9/20]

 

CHART CITATIONS:

wsj.com/market-data [1/10/20]

quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices [1/10/20]

quotes.wsj.com/index/SPX/historical-prices [1/10/20]

treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [1/10/20]

In this week’s recap: Oil prices spike after a U.S. airstrike in Iran raises supply disruption concerns; a manufacturing activity index disappoints; stocks are little changed following an abbreviated trading week.

Weekly Economic Update

Presented by Cornerstone Financial Advisory, LLC, January 6, 2020

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THE WEEK ON WALL STREET

Stocks descended from record highs Friday, as traders reacted to a U.S. drone strike that killed Iran’s top military officer. Oil prices rose more than 3% following the breaking news.¹

Wall Street benchmarks ended up having a sideways week, shortened by the New Year’s Day holiday. The Dow Jones Industrial Average lost 0.04% across four trading sessions; the S&P 500, 0.16%. In contrast, the Nasdaq Composite rose 0.16%. The MSCI EAFE index, benchmarking developed overseas stock markets, added 0.30%.^2-3

 

Oil Takes Center Stage

WTI crude oil settled at $63.05 a barrel on the New York Mercantile Exchange Friday, down from an intraday peak of $64.09 (which was its highest price since April).

The commodity rallied Friday as energy traders considered the possibility of supply disruptions in the Middle East in retaliation for last week’s U.S. air strike.⁴

 

Manufacturing Activity Declines

At the start of each month, economists watch the Institute for Supply Management’s Purchasing Managers Index for the factory sector, which is considered a key barometer of U.S. manufacturing health.

Last week, ISM announced a December reading of 47.2 for this index, the poorest in more than ten years. A reading below 50 indicates manufacturing activity is contracting rather than expanding.⁵

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T I P   O F   T H E   W E E K

Turning 50 in 2020? You now have the chance to make catch-up contributions to retirement accounts and to workplace retirement plans.

 

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THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: The Institute for Supply Management presents its December Non-Manufacturing Purchasing Managers Index, gauging the pace of activity in the U.S. service sector.

Wednesday: Payroll processor ADP releases its December national private-sector employment report.

Friday: The December jobs report from the Department of Labor.

Source: MarketWatch, January 3, 2020

The MarketWatch economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Wednesday: Constellation Brands (STZ), Lennar (LEN), Walgreens Boots Alliance (WBA)

Friday: Infosys (INFY)

Source: Zacks.com, January 3, 2020

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

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Q U O T E   O F   T H E   W E E K

“The moment of victory is much too short to live for that and nothing else.”

MARTINA Navratilova

 

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T H E   W E E K L Y   R I D D L E

A couple took a trip to the Arctic Circle, and they were disappointed that they did not see any penguins. What didn’t they realize about penguins?

 

LAST WEEK’S RIDDLE: Two people are born at the same moment, but they don’t have the same birthdays. How can this be?

ANSWER: They are born in different places, in different time zones.

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This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The MSCI EAFE Index is a stock market index that is designed to measure the equity market performance of developed markets outside of the U.S. and Canada. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

1 – investors.com/market-trend/stock-market-today/dow-jones-dives-us-airstrike-gold-prices-oil-prices-jump-tesla-stock/ [1/3/20]

2 – wsj.com/market-data [1/3/20]

3 – quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices [1/3/20]

4 – reuters.com/article/us-global-markets/oil-safe-havens-surge-after-u-s-strikes-kill-iran-commander-idUSKBN1Z2042 [1/3/20]

5 – marketwatch.com/story/us-manufacturing-slumps-worsens-in-december-as-ism-index-falls-to-10-year-low-2020-01-03 [1/3/20]

 

 

CHART CITATIONS:

wsj.com/market-data [1/3/20]

quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices [1/3/20]

quotes.wsj.com/index/SPX/historical-prices [1/3/20]

treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [1/3/20]

In this year-end recap: A look back at the ascent stocks made during 2019 and some of the key economic developments of the year.

Weekly Economic Update

Presented by Cornerstone Financial Advisory, December 30, 2019

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What Drove the Markets?

Four factors influenced investment performance in 2019: a shift in U.S. monetary policy, the ongoing trade dispute between the U.S. and China, earnings, and the economy.

Stocks reached record highs in 2019. The S&P 500 climbed above 3,000 for the first time. The benchmark ended Friday’s trading session up 29.25% for the year. At Friday’s close, the Dow Jones Industrial Average showed a year-to-date advance of 22.95%, while the Nasdaq Composite was up 35.74% YTD. The MSCI EAFE index, representing foreign stocks, was up 18.10% YTD through December 27.^1,2

 

The Federal Reserve Eased

The central bank made three quarter-point cuts to the benchmark short-term interest rate in 2019. That was a change from 2018, when the Fed worked on normalizing monetary policy with interest rate increases, while thinning its large bond portfolio.

By and large, investors welcomed the policy shift. At the end of 2018, there were concerns that the Fed’s effort to tighten the money supply had backfired, with higher U.S. interest rates impeding both the domestic and global economy.³

 

The U.S. and China Trade Quarrel Cooled Down Slightly

In December, representatives from both nations agreed on a “phase-one” trade deal after a year-and-a-half of imposing tariffs on each other’s products. This pact, which is expected to be signed in 2020, is characterized as an initial step toward a larger deal.

In May, the U.S. put 25% tariffs on $200 billion of Chinese imports; a month later, China imposed a 25% import tax on $60 billion of U.S.-made goods reaching its shores. These tariffs may be reduced or removed as part of the phase-one deal. (Another $120 billion worth of Chinese goods are currently under a 7.5% tariff, reduced from 15% by the new agreement.)⁴

 

Earnings Beat (Low) Expectations

Stock market analysts were pessimistic about corporate profits as the year began. With economies worldwide slowing down in 2018, year-over-year earnings growth for S&P 500 firms seemed poised to decelerate.

Deceleration was evident, but later in the year, many firms managed to exceed reduced estimates. According to stock market analytics firm FactSet, 75% of S&P 500 components beat earnings-per-share estimates in Q3, compared to a 5-year historical average of 72%.⁵

 

The Economy Maintained Momentum

Gross domestic product came in at 3.1% in Q1, 2.0% in Q2, and 2.1% in Q3. Through November, nonfarm payrolls growth had averaged 180,000 per month during 2019. Manufacturing output varied, as CEOs were less certain about expansion and capital investments during the first half of the year; it declined in Q1 and Q2 before improving again in Q3.^6,7

The Conference Board’s Consumer Confidence Index was at 125.5 in November, above its (revised) January mark of 121.7. Inflation stayed under 2% for most of the year before reaching a 12-month high of 2.1% in November.^8,9

 

What’s Ahead

Congress passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act before Christmas, and President Trump signed it into law last week. This new law alters a key rule pertaining to traditional retirement accounts. It raises the age for Required Minimum Distributions (RMDs) from these accounts, from 70½ to 72. (If you are now 70½ or older, this change does not affect your scheduled RMDs. Only those who turn 70½ in 2020 or later are subject to the new rule.)¹⁰

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T I P   O F   T H E   W E E K

If you have not yet automated your retirement account contributions, consider doing so for 2020 and years ahead. This is a way to help you prepare for retirement, even while other things are on your mind.

 

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THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: The Conference Board publishes its last monthly Consumer Confidence Index of 2019.

Friday: The Institute for Supply Management presents its December manufacturing index, a gauge of U.S. factory activity.

Source: Econoday, December 27, 2019

The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

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Q U O T E   O F   T H E   W E E K

“A single day is enough to make us a little larger.”

PAUL KLEE

 

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T H E   W E E K L Y   R I D D L E

Two people are born at the same moment, but they don’t have the same birthdays. How can this be?

 

THE RIDDLE FROM THE PREVIOUS WEEKLY ECONOMIC UPDATE: The more places I be, the less you can see. What am I?

ANSWER: Darkness.

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 This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The MSCI EAFE Index is a stock market index that is designed to measure the equity market performance of developed markets outside of the U.S. and Canada. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

1 – wsj.com/market-data [12/27/19]

2 – quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices [12/27/19]

3 – washingtonpost.com/business/2019/12/11/year-federal-reserve-admitted-it-was-wrong/ [12/11/19]

4 – bbc.com/news/business-45899310 [12/16/19]

5 – insight.factset.com/earnings-insight-q319-by-the-numbers-infographic [11/21/19]

6 – marketwatch.com/tools/calendars/economic [12/27/19]

7 – bls.gov/iag/tgs/iag31-33.htm [12/20/19]

8 – investing.com/economic-calendar/cb-consumer-confidence-48 [12/27/19]

9 – tradingeconomics.com/united-states/inflation-cpi [12/27/19]

10 – marketwatch.com/story/with-president-trumps-signature-the-secure-act-is-passed-here-are-the-most-important-things-to-know-2019-12-21 [12/25/19]

 

 

CHART CITATIONS:

wsj.com/market-data [12/27/19]

quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices [12/27/19]

quotes.wsj.com/index/SPX/historical-prices [12/27/19]

treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield [12/27/19]

treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [12/27/19]