2/7/20 Market Notes
What a week… through Thursday, the Dow Jones Industrial Average has soared more than 1,000 points, or 3.75%, while the S&P 500 has gained just under 3 ½%. In spite of the impressive top-line numbers, there have been significant performance differences amongst the various sectors of the S&P and stocks in general. For instance, the Utilities sector is down about ½% so far this week, while the Technology sector is up nearly 5% over the same 4 days. Traditionally defensive sectors have underperformed, but even within the more favored growth sectors, several stocks are well off their highs. Oil prices continue to hover slightly above $50 per barrel, while the U.S. dollar is slightly higher and Treasury yields are steady.
On the economic front, yesterday’s Unit Labor Cost and Productivity reports both fell shy of expectations, raising some concerns that the economy is not on as solid footing as markets appear to be pricing in. This morning’s January payroll report showed continued tightness in the labor market, and that the economy added 225,000 jobs in January, well above estimates. However, the report wasn’t universally positive as the manufacturing sector lost 12,000 jobs, the fourth consecutive month of declines. Moreover, many of the jobs that were created in the construction sector are seasonal and temporary.
European and Asian markets are mostly lower overnight, and U.S. premarket equity futures are pointing to a lower open. Prior to the very strong labor report, Dow futures were down more than 100 points but cut that figure in half after the report was released.
Looking ahead to next week, earnings season is nearing a close, and the following key economic reports are expected:
Tuesday: Small Business sentiment index
Thursday: Consumer Prices
Friday: Retail Sales and Consumer Sentiment
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.