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New orders for manufactured durable goods in December increased $3.0 billion, or 1.2%, to $254.4 billion, according to the latest Census Bureau report. This increase, up two consecutive months, followed a 1.0% November increase.
Sales of existing homes fell for the third consecutive month in January, according to the National Association of Realtors®. Of the four major geographical regions of the United States, only the Northeast saw sales climb higher in January over December.
For the week ended February 16, there were 216,000 new claims for unemployment insurance, a decrease of 23,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims remained at 1.2% for the week ended February 9. The advance number of those receiving unemployment insurance benefits during the week ended February 9 was 1,725,000, a decrease of 55,000 from the prior week’s level.
DJIA: 26,031.81, up 0.57%
Nasdaq: 7,527.54, up 0.74%
S&P 500: 2,792.67, up 0.62%
Russell 2000: 1,590.06, up 1.33%
Global Dow: 3,010.94, up 1.00%
Fed. Funds: 2.25% -2.50%, unchanged
10-year Treasuries: 2.65%, down 1 bps
Stocks moved modestly higher, helping the Dow Jones Industrial Average mark its longest streak of weekly gains in nearly a quarter of a century. Materials and utilities stocks led the gains within the S&P 500 Index, while health care shares trailed, held down in part by a disappointing 2019 earnings projection from CVS Health. Communication services stocks were also weak following disappointing results from video gaming companies. Volatility continued to moderate, with the Cboe Volatility Index (VIX) touching its lowest level in over four months, and trading volumes were generally subdued as earnings reporting season continued to wind down. Nearly 90% of S&P 500 companies were expected to have reported fourth-quarter results by the end of the week, according to Thomson Reuters. Markets were closed Monday in observance of Presidents’ Day.
One driver of the week’s gains appeared to be the release of the minutes from the Federal Reserve’s last policy meeting, which highlighted a continued “wait and see” approach for future rate hikes, according to traders. Policymakers also indicated that they would stop shrinking the central bank’s balance sheet by the end of the year, a drawdown that has slowly been removing liquidity from the financial system since late 2017.
Longer-term bond yields remained roughly steady for the week. (Bond prices and yields move in opposite directions.) The municipal market continued to see limited supply and cash inflows, resulting in relatively light trading in the primary market. Rich valuation ratios (muni yields relative to Treasury yields) have spurred investors determined to put cash to work into higher-yielding bonds, helping spur interest in new bonds backed by the Puerto Rico Urgent Interest Fund Corporation, known by its Spanish acronym, COFINA.
Conversely, the primary market for investment-grade corporate bonds was active despite the abbreviated trading week. Most new deals were well received with steady demand across the credit spectrum. At the market’s close on Thursday, total new issuance had already met expectations for the week.
Analysts noted that the high yield market was mostly focused on earnings releases and company-specific news, including reports on the status of merger and acquisition transactions. Trading volumes were somewhat subdued, although light new issuance led to more buying activity in the secondary market. High yield bond funds reported inflows.
The pan-European STOXX Europe 600 Index rose throughout the back half of the week amid investor optimism that U.S.-China trade talks were progressing. The UK FTSE 100 Index lost ground, however, as the possibility of a no-deal Brexit grew.
The British pound moved higher against the U.S. dollar for much of the week even as Fitch put the UK’s AA credit rating on negative watch as uncertainty about Brexit mounts.
The Nikkei 225 Stock Average shrugged off disappointing economic data and rallied 2.5% for the week, leaving it with a 7.05% gain thus far in 2019. The large-cap TOPIX Index and the TOPIX Small Index also generated strong gains of about 2% for the week. Both broader indexes are ahead about 8% for the year to date. At the close on Friday, the yen stood at ¥110.73 per U.S. dollar, up slightly for the week and versus the ¥109.69 level at the end of 2018.
Portions of the preceding information are reprinted with permission from Broadridge Investor Communication Solutions, Inc. Copyright 2018. Portions of the preceding information are shared from T. Rowe Price Weekly Market Wrap-Up.
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GYL Resnick Weekly Update – March 4, 2019