9 in a Row – Monday Morning Market Memo – February 25, 2019

Good morning,

The Dow Jones Industrial Average rallied over 180 points Friday on optimism over trade talks with China, and closed the week with a gain of .6 percent. This brings the Dow’s consecutive weekly winning streak to a total of 9, the longest such run since 1995, according to the Dow Jones Data Group. Additionally, the index finished back above the psychologically notable 26,000 level, territory it last saw in November of last year.

Trade related headlines were the driving force behind market action last week. While some of the reports were at times contradictory, the market settled on the belief that real progress was being made, especially after President Trump said a summit with Chinese President Xi (to potentially finish up a trade deal) in March is possible. Further positive news broke over the weekend, as Trump tweeted yesterday late afternoon that “the U.S. has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues” and that as a result “I will be delaying the U.S. increase in tariffs now scheduled for March 1.” We believe this positive sentiment surrounding a trade deal is the primary factor behind the bounce in equity prices this morning – with the Dow opening up around 170 points.

Developments with the trade deal will likely be the focal point for markets again this week, especially now that earnings season is largely behind us. According to I/B/E/S data from Refinitiv: Fourth quarter earnings are expected to increase 16.3% from Q4 2017, and of the 444 companies in the S&P 500 that have reported earnings to date for Q4 2018, 69.1% have reported earnings above analyst expectations, which is above the long-term average of 64%.

As always, don’t hesitate to contact us with any questions or if you would like to set up a meeting with us.

All the best,

Southport Station Financial Management, LLC