Investment Commentary – January 21, 2020

Year to Date Market Indices as of Market Close January 21, 2020
• Dow 29,192 (2.30%)
• S&P 3,320 (2.79%)
• NASDAQ 9,370 (4.44%)
• Gold $1,558(2.54%)
• Oil $58.25 (-4.84%)
• Barclay Bond Aggregate (0.89%)
• All World Index 2.40%)
• Fed Funds Rate 1.75 (Three -0.25 rate cuts in 2019)
• US Real GDP Growth 2.1 Q3/2019 (Up from 2.0 in Q2)

Stock-market losses accelerate after report of first coronavirus case in U.S.

Airline, travel stocks hit

U.S. stocks pulled back from records on Tuesday after news of the first case of coronavirus in the U.S. spooked investors who have been enjoying a brisk, record-setting run-up for the major benchmark indexes in recent weeks.

U.S. markets were closed Monday in observance of Martin King Luther Jr. Day.

“The spreading of the virus in China was part of a number of issues contributing to futures trading lower, but the intraday downturn we see now is more related to reports that [the coronavirus] could be a domestic issue. When you have a market close to all-time highs, it’s vulnerable to any bad news,” said Randy Frederick, managing director of Trading & Derivatives at Schwab Center for Financial Research.

At the same time, he said such shocks tend to prove short-lived, especially, in a bull market that has seen records across major equity benchmarks in week after week.

How are benchmarks faring?

The Dow Jones Industrial Average DJIA, -0.52% shed 188 points, or 0.6%, to 29,160, on track to break its five-day winning streak. The S&P 500 index SPX, -0.27% fell 10 points, or around 0.3%, at 3,320 and the Nasdaq Composite index COMP, -0.19% was down 28 points, or 0.3%, to trade at 9,361, but briefly turned positive mid-session to set a record intraday high of 9,397.58.
Last week, the Dow, S&P 500 and Nasdaq Composite Index COMP, -0.19% all posted their best weekly gains since Aug. 30, according to FactSet data.

DJIA, -0.52% The Dow has risen for five of the past six weeks, with a year-to-date return of 2.6%. The S&P 500 has gained for two consecutive weeks, with a year-to-date return of 2.9% and the Nasdaq has risen for six straight weeks, with a year-to-date return of 4.6%.

Around The web

Records rise: The major U.S. stock indexes rose around 2% for the week, pushing their record levels higher, and the Dow closed above 29,000 for the first time on Wednesday. For the S&P 500, it was the seventh positive week out of the past eight.

Trade pact signed: The United States and China on Wednesday signed a trade pact that removes many—but not all—U.S. tariffs on Chinese imports and commits China to purchase more U.S. goods. Negotiations on a potential second-phase deal addressing broader systemic disagreements are likely to begin soon, but they aren’t expected to be completed before the U.S. presidential election in November.

Bank catalyst: Some of the nation’s biggest banks kicked off earnings season, reporting mostly solid results and providing a lift for stocks. Four of the six major banks that reported quarterly results beat analysts’ estimates for earnings and revenue, despite headwinds that the industry faces from low interest rates.

Trillion dollar club: Google’s parent company has become the fourth U.S. company to achieve market capitalization of $1 trillion, based on the value of its publicly traded shares. Shares of Alphabet topped that threshold on Thursday, joining other $1 trillion-plus companies Apple, Amazon.com, and Microsoft.

Upcoming Reports

Wednesday: Existing home sales, National Association of Realtors

The views presented are not intended to be relied on as a forecast, research or investment advice and are the opinions of the sources cited and are subject to change based on subsequent developments. They are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investments.

https://www.marketwatch.com/story/dow-futures-pull-back-as-stock-market-stages-pause-from-record-setting-rise-2020-01-21?mod=home-page