1/7/20 Market Notes
After initially falling more than 200 points in the first couple of hours of trading, the Dow Jones Industrial Average and other U.S. equity indexes rebounded to close in positive territory.
By the time the closing bell rang at the New York Stock Exchange, the Dow rose 60 points, or ¼%, while the S&P 500 ended 0.35% higher as eight of the eleven sectors that comprise the index ended higher. Communication Services led with a 1.22% gain, followed by a 0.78% rise in the Energy sector, which rose in spite of a fall in oil prices. The U.S. dollar was slightly lower against major currencies, as Treasury yield remained relatively steady with the benchmark Ten Year Yield closing at 1.804%. A flight to safely was evidenced, as Gold prices rose another 1% to end the session at $1,567 per Troy Ounce.
European and Asian bourses appear to be following yesterday’s U.S. equity market pattern, reversing early losses to trade significantly higher. The NIKKEI is up more than 1 ½% in late trading, while the German DAX index is up more than 1% half way through its trading session. U.S. equity futures are pointing to a flat open, as economic optimism is being pitted against renewed geopolitical concerns.
While Iran and geopolitics are likely to dominate news headlines, we expect market participants to look past these and instead focus their attention on economic data and the upcoming earnings season. Today’s Trade Deficit, ISM Non-Manufacturing and Factory Orders data are the key releases. Earnings season kicks off next week, as analysts expect a 1 ½% year-over-year earnings decline on a blended basis for the constituents of the S&P 500. Should this earnings decline materialize, it would be the fourth consecutive earnings decline in a row. However, year-over-year earnings growth is expected to accelerate into 2020.
The 1879 Advisors Investment Committee
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.