NDS Weekly Commentary (11.4.19) – Trick or TREAT – S&P 500 and NASDAQ reach all-time highs

November 4, 2019

It was a record setting week on Wall Street as stocks rallied towards all-time highs. Despite the impeachment drama, a Federal Reserve interest rate cut, better-than-expected October jobs report, and reasonable corporate earnings fueled investor’s enthusiasm. On Friday, China announced it reached a consensus with the U.S., in principle, on the first phase of a trade deal.

For the week, the DJIA increased 1.4%, the S&P 500 rose 1.5%, and the tech-heavy NASDAQ rose 1.7%. International equities were also stellar with developed markets (MSCI EAFE) up 1.2% while emerging markets (MSCI EM) increased 1.3%.

As widely expected, the Federal Reserve reduced the federal funds rate by 0.25% and Chairman Powell said that further increases would only come after there is evidence of an uptick in inflation which is now close to 2%. The yield on the 10 year U.S. Treasury declined from 1.80% last week to 1.71%.

Last month, 128,000 jobs were added in spite of 50,000 GM workers out on strike, which far exceeded the 89,000 consensus estimate. This provided an improved outlook for consumer spending and support for the slowing economy.

According to FactSet, 3/4 of companies have reported 3rd quarter earnings, with 76% of S&P 500 companies beating estimates. The best weekly sector performance was healthcare which was up 3.05%. There will be a slew of corporate earnings released this week. On Monday, durable goods will be reported, the services Purchaser’s Managers Index (PMI) on Tuesday, and consumer sentiment on Friday.

“Don’t give up on your dreams, or your dreams will give up on you.” – John Wooden