Weekly Expert Market Perspectives Park Avenue Securities PAS

S&P 500 Snaps Six-Week Winning Streak

The S&P 500 snapped a six-week winning streak, although it declined just 0.3% this week. The Dow Jones Industrial Average (-0.5%), Nasdaq Composite (-0.3%) and Russell 2000 (-0.5%) performed in-line with the benchmark index this week, reflecting a broad-based lack of conviction. 

The week began with the large-cap indices closing at incremental record highs on Monday, but stocks ultimately struggled for direction the rest of the week. The S&P 500 materials (-1.7%) and real estate (-1.2%) sectors lost more than 1%. The health care (+0.8%), financials (+0.5%), and utilities (+0.2%) sectors finished higher. 

Trade headlines remained a part of the equation, of course. Receiving the most attention was a Reuters report that briefly unnerved the market by suggesting a deal may not be completed this year. There was still no sustained pullback effort, though, as the consensus view was that some sort of deal is still likely. 

As for the Dec. 15 tariffs, a report out of China had suggested that they could get delayed even if a deal isn't reached, but a FOX Business reporter said that they are still planned. Complicating the situation was the U.S. Senate passing the Hong Kong Human Rights and Democracy Act, which unsurprisingly drew the ire of Beijing. Chinese President Xi called for mutual respect and equality moving forward.

Back to stocks, retailers remained on the path of divergence after this week's batch of earnings reports. Home Depot (HD) and Kohl's (KSS) were some notable disappointments, while Target (TGT), Lowe's (LOW), and Nordstrom (JWN) were some notable winners. The SPDR S&P Retail ETF (XRT) declined 2.3% this week. 

Separately, Charles Schwab (SCHW) began talks to acquire TD Ameritrade (AMTD) for a reported $26 billion in a move that would help consolidate a disrupted industry. Shares of both companies climbed about 8% and 16%, respectively.

The U.S. Treasury market experienced some curve-flattening activity this week. The 2-yr yield increased two basis points to 1.63%, while the 10-yr yield declined six basis points to 1.77%. The U.S. Dollar Index increased 0.3% to 98.26. WTI crude increased 0.2%, or $0.13, to $57.88. 

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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.

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2019-90280 (Exp 2/20)