1/15/20 Market Notes
The Dow Jones Industrial Average relinquished a 100 point + gain to close modestly higher as details of the Phase 1 Trade Deal emerged. The S&P 500 and NASDAQ ended about ¼% lower, as eight of the eleven sectors comprising the S&P ended lower. The Utilities and Healthcare sectors were the best performers, while the Technology sector led on the downside with a 0.80% loss. Earnings season kicked off with better than forecast performance by major banks, including JP Morgan (JPM) and Wells Fargo (WFC), both of which beat earnings and revenue estimates. Oil prices climbed just over ½%, as the U.S. dollar strengthened and the benchmark Ten Year Treasury Yield was flat closing the session at 1.814%.
The long awaited Phase 1 Trade Deal is set to be signed today, a day after the Trump administration announced that all tariffs would remain in place until after the November election. The proclamation came as a surprise to many, causing some to wonder how serious this deal is. Moreover, Chinese State media is reporting that additional concessions and trade negotiations in the near term are unlikely. Furthermore, while the deal includes a promise by the Chinese to purchase billions of dollars of agricultural products from the United States, there are serious questions about enforcement as well as our ability to export enough goods to fulfill the commitments.
Asian and European bourses are mostly lower this morning, while premarket U.S. equity futures are pointing to a flat open ahead of the Trade Deal signing and key economic data. Looking past the ceremonial signing, investors are likely to focus on today’s Producer Price Index and Beige Book reports, as well as earnings from Bank of America (BAC), United Healthcare (UNH), Goldman Sachs (GS) and Alcoa (AA).
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.