Happy – Monday Morning Market Memo – November 4, 2019

Happy – Monday Morning Market Memo – November 4, 2019

Good morning,

“Happy” is a song that was written and produced by Pharrell Williams, and was a soundtrack for the animated movie Despicable Me 2 in 2013. We are not sure what that happiness was all about, but we can certainly tell you why the stock market is happy, as all three major indexes – the Dow Jones Industrial Average, the NASDAQ Composite, and the Standard & Poor’s 500 Index – are all trading at fresh all-time highs this morning.

The stock market got treated last week (Halloween pun intended) with corporate earnings that continue to come in better-than-expected, an interest rate cut by the Federal Reserve, and an October Jobs Report that easily surpassed consensus estimates. Looking specifically at these items:

With 71% of the companies in the S&P 500 having already reported actual results for the third-quarter of 2019, 76% have reported earnings above estimates, which is above the 5-year average, according to data from FactSet;

The Federal Reserve cut its benchmark interest rate by ¼ point, to a range of 1.5% to 1.75%, it was the third rate cut this year, providing the market with monetary policy accommodation;

The U.S. Department of Labor reported the economy added 128,000 jobs in October, notably above the 75,000 to 90,000 range expected by the market (additionally, numbers for the prior two months were revised significantly higher).

Add to the above some positive chatter over the weekend surrounding the trade issues with China, and the market, along with many investors, is happy, happy, happy! Looking to the week ahead there is not much in the way of economic data, but we are looking forward to another batch of corporate earnings. Familiar names scheduled to report include Consolidated Edison, CVS Health, Booking Holdings, Keurig Dr. Pepper, Monster Beverage, and Walt Disney.

All the best – Southport Station Financial Management, LLC