Weekly Expert Market Perspectives Park Avenue Securities PAS

S&P 500 Climbs Past 3300 in Strong Start to Earnings Season

The stock market plowed to new records this week, as earnings reports, economic data, trade news, and the bullish price action continued to bolster risk sentiment. The S&P 500 (+2.0%), Nasdaq Composite (+2.3%), and Russell 2000 (+2.5%) rose at least 2.0%, and the Dow Jones Industrial Average (+1.8%) followed right behind. 

Six of the 11 S&P 500 sectors finished with gains of at least 2.0%, including a 3.8% gain in the defensive-oriented utilities sector. The energy sector (-1.1%) was the only sector to finish lower, as oil prices ($58.55/bbl, -0.44, -0.8%) continued to falter.

The macro news flow remained mostly positive and ultimately indicated that the economy is still growing at a steady pace, which could continue to favor equities. In economic data, retail sales and housing starts showed healthy gains in December, while inflation pressures remained muted. In trade news, the U.S. removed China from its currency manipulator list, the Phase One trade deal was signed, and the USMCA trade deal was passed in the Senate.

Earnings reports were generally positive, too. Financial companies, most notably Morgan Stanley (MS), kicked off the fourth quarter reporting season with solid results, although investors will have to wait until next week for guidance from a broader set of companies. 

Strikingly, Alphabet (GOOG) became the fourth U.S. company to reach the $1 trillion market-cap valuation this week. General concerns about valuations were subdued this week considering all the pieces of good news, which also helped the market look past relatively disappointing holiday sales results from Target (TGT) and earnings results from several transportation companies.

U.S. Treasuries were little changed in another quiet week of trading despite the rally in equities. The 2-yr yield was unchanged at 1.56%, and the 10-yr yield increased one basis point to 1.84%. The U.S. Dollar Index increased 0.3% to 97.662. On a related note, the Treasury Department said it will start issuing 20-yr bonds in the first half of this year.

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Past performance is not a guarantee of future results. Indices are unmanaged and one cannot invest directly in an index. Diversification does not guarantee investment returns and does not eliminate the risk of loss.

Data and rates used were indicative of market conditions as of the date shown and compiled by Briefing.com. Opinions, estimates, forecasts, and statements of financial market trends are based on current market conditions and are subject to change without notice. References to specific securities, asset classes and financial markets are for illustrative purposes only and do not constitute a solicitation, offer, or recommendation to purchase or sell a security. S&P 500 Index is a market index generally considered representative of the stock market as a whole. The index focuses on the large-cap segment of the U.S. equities market. Each company’s security affects the index in proportion to its market value. NASDAQ Composite Index is a market value-weighted index that measures all NASDAQ domestic and non-U.S. based common stocks listed on the NASDAQ stock market. Dow Jones Industrial Average is a widely used indicator of the overall condition of the stock market, a price-weighted average of 30 actively traded blue chip stocks, primarily industrials, but also includes financial, leisure and other service-oriented firms. Russell 2000 Index measures the performance of the smallest 2,000 companies in the Russell 3000 Index of the 3,000 largest U.S. companies in terms of market capitalization. MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets.

Park Avenue Securities LLC (PAS) is a wholly-owned subsidiary of The Guardian Life Insurance Company of America (Guardian). PAS is a registered broker/dealer offering competitive investment products, as well as a registered investment advisor offering financial planning and investment advisory services. PAS is a member of FINRA and SIPC.

2020-93026 (Exp 4/20)