The U.S. and China announced last week they agreed to “phase one” of a trade deal. The market did not mind much that specifics were notably lacking, the deal is not signed yet, and the “feel” of the agreement was underwhelming. What mattered most to the stock market was that the additional tariffs set to take effect yesterday were cancelled. The trade war has weighed on global economic activity and sentiment. So with things seemingly headed in a less confrontational direction now, the market viewed “phase one” as a net positive.
Also boosting confidence last week was news out of the Federal Reserve. The Fed stated “the current stance of monetary policy is appropriate to support sustained expansion of economic activity,” and signaled no interest rate hikes ahead for all of 2020. The election results in Britain paved the way for Brexit, and this removed another piece of uncertainty from the global markets (markets tend to dislike uncertainty). Put it all together and the result was decent gains for stocks last week.
The Dow Jones Industrial Average added .4% to 28,135.38, the NASDAQ Composite rose .9% to 8,734.88, and the Standard & Poor’s 500 Index advanced .7% to 3,168.80. Looking to the week ahead, a diverse handful of companies are scheduled to report earnings. General Mills, Micron Technology, Paychex, Conagra Brands, and Nike are all due out with their reports, as is economic bellwether FedEx, whose commentary often provides insight into the strength of the global economy.
As always, don’t hesitiate to call us with any questions or if you would like to set up a meeting.
All the best – Southport Station Financial Management, LLC