THE WEEK ON WALL STREET
Stock benchmarks were little changed for much of last week, but a rally occurred Friday after news broke that the U.S. and China could be closing in on the first phase of a new trade pact. At Friday’s close, the Dow Jones Industrial Average crossed the 28,000 level. The Dow rose 1.17% for the week, outgaining the S&P 500 (which advanced 0.89%) and the Nasdaq Composite (which added 0.77%). The MSCI EAFE index, representing developed overseas stock markets, fell 0.77%.
WILL THERE BE A TRADE BREAKTHROUGH?
Friday, Secretary of Commerce Wilbur Ross told the media that “in all likelihood,” a phase-one trade deal between China and the U.S. would presently happen, stating that the talks were “down to the last details.” Thursday evening, White House economic adviser Larry Kudlow expressed similar optimism, noting that negotiations were “coming down to the short strokes.” That said, the Wall Street Journal reported last week that President Trump is not yet committed to signing a phase-one trade deal. Secretary Ross noted that such an agreement would be “relatively limited in scope.”
CONSUMERS BOOST THEIR BUYING
Retail sales advanced 0.3% in October, according to the Department of Commerce. That matched the gain forecast by economists polled by MarketWatch. This was a comeback after a September decline.
THE WEEK AHEAD: KEY ECONOMIC DATA
Wednesday: Minutes from the October Federal Reserve meeting will be released.
Thursday: The National Association of Realtors presents data on October existing home sales.
Friday: The University of Michigan publishes its final Consumer Sentiment Index for November (an assessment of consumer confidence).
THE WEEK AHEAD: NOTABLE COMPANIES REPORTING EARNINGS
Tuesday: Home Depot (HD), Medtronic (MDT), TJX Companies (TJX)
Wednesday: Lowe’s (LOW), Target (TGT)
Thursday: Intuit (INTU), Ross Stores (ROST)
The markets have had a strong rebound from the lows last December. They’ve had a little help along the way from a dovish Fed and hopes of a trade deal with China. While some fundamental areas have shown signs of cracks, the market marches on. In the short term, stocks do appear a somewhat overbought, which could mean a little pullback before we see any meaningful movement. Sir John Templeton said "Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria."
Wall Street and many others are pretty happy with themselves right at the moment. I'm just trying to decide if their optimism has moved to euphoria. We will continue to monitor the markets and the economy and are ever grateful serving you.