1/14/20 Market Notes
The S&P 500 made a new record high, climbing 0.70%, while the Dow Jones Industrial Average gained 83 points (0.28%), ending just shy of its record close. Ten of the eleven sectors comprising the S&P ended higher, led by the Materials, Real Estate and Technology sectors, which all gained more than 1 ¼%, while the Healthcare sector was the sole looser with a 0.36% decline. Oil prices fell by 1.68% to $58.05 per barrel, as lower tensions in the Middle East reduced investor anxiety. The U.S. dollar was slightly lower, as the benchmark Ten Year Treasury yield remained steady, closing the session at 1.842%.
Investors were encouraged by the prospect of the planned signing of the Phase 1 Trade Deal this coming Wednesday. The deal includes a pledge by China to purchase billions of dollars of agricultural products from the United States, as well as beginning the process of changing its punitive ‘technology transfer’ laws. In exchange, and in a largely symbolic move, President Trump’s administration removed the ‘Currency Manipulator’ tag from Beijing, and is set to reduce and eliminate certain tariffs that have been in place for nearly 2 years. While this is being viewed as progress, questions remain as to what the next steps will be and how to enforce various components of this Phase 1 deal.
Looking past geopolitics and trade, market participants are certain to focus on earnings reports, which kick off in earnest today. JP Morgan (JPM), CitiGroup (C), Wells Fargo Corp (WFC) and Delta Airlines (DAL) are amongst the widely held stocks reporting fourth quarter earnings today. Separately, Morgan Stanley issued a research report stating that Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG) and Facebook (FB) now account for 18% of the S&P 500’s market capitalization, an unprecedented high figure. Morgan Stanley and several other money center banks warn that a sharp move in any or several of these four stocks could have a disproportional impact on the index’s performance and warns clients of this risk.
European and Asian bourses are mixed with an upward bias, while premarket U.S. equity futures are pointing to a slightly higher open in early trading.
Disclosures: This market commentary is written by the 1879 Advisors Investment Committee and represents the views of 1879 Advisors. This commentary is not investment advice and should not be used as a basis to make investment decisions. Please consult with your registered investment advisor before making any investment decisions.