Market Insights 11/20/2019

U.S. stocks finished lower, as the continued uncertainty surrounding a U.S.-China “phase one” trade deal lingered to hamper sentiment.

Treasury yields were lower and the U.S. dollar was higher, with mortgage applications declining and the minutes from the Fed’s October monetary policy meeting that delivered a third rate cut of the year solidifying the Fed’s move to pause future rate actions.

Gold was little changed and crude oil prices were higher after yesterday’s tumble.

The Markets…

The Dow Jones Industrial Average lost 113 points (0.4%) to 27,821

The S&P 500 Index declined 12 points (0.4%) to 3,108

The Nasdaq Composite fell 44 points (0.5%) to 8,527

In heavy volume, 1.0 billion shares were traded on the NYSE and 2.5 billion shares changed hands on the Nasdaq

WTI crude oil rose $1.66 to $57.01 per barrel and wholesale gasoline gained $0.06 to $1.66 per gallon

The Bloomberg gold spot price inched $0.18 lower to $1,472.28 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—ticked 0.1% higher to 97.91

Mortgage applications decline, Fed meeting minutes solidify pause

The MBA Mortgage Application Index declined 2.2% last week, following the prior week’s 9.6% jump. The decrease came as a 7.7% drop in the Refinance Index more than offset a 6.7% gain for the Purchase Index. The average 30-year mortgage rate fell 4 basis points to 3.99%.

In afternoon action, the Federal Reserve released the minutes from its October monetary policy meeting, after which the Central Bank announced a third rate cut of the year but signaled a pause and raised the bar for inflation in regard to when it would consider deploying a rate hike campaign. At the meeting, Committee Members saw the rate cut as adequate “to support the outlook of moderate growth, a strong labor market, and inflation near the Committee’s symmetric 2 percent objective,” and that the stance of the policy “likely would remain” steady “as long as incoming information about the economy did not result in a material reassessment of the economic outlook.”

Treasuries were higher, as the yield on the 2-year note declined 2 bps to 1.58%, while the yields on the 10-year note and 30-year bond dropped 6 bps to 1.73% and 2.20%, respectively.

Tomorrow, the economic calendar will hold weekly initial jobless claims, expected to have declined by 7,000 to 218,000, as well as the Index of Leading Economic Indicators (LEI), with economists projecting a 0.2% month-over-month fall for October, followed by existing home sales, forecasted to have rebounded to a 2.0% m/m gain at an annual rate of 5.49 million units during October from September’s 2.2% fall to an annual pace of 5.38 million units.

Europe mixed amid flared-up trade concerns

European equities were mixed, as the recent increase in optimism surrounding a U.S.-China “phase one” trade deal that has boosted the global stock markets and fostered a slew of record highs in the U.S. was tempered somewhat.

The resurfaced trade uncertainty came courtesy of U.S. President Donald Trump’s threat of increased tariffs on Chinese goods if a deal is not reached, and was further complicated by the U.S. Senate passing a bill supporting protesters in Hong Kong. The euro and British pound traded lower versus the U.S. dollar, while bond yields in the region were mixed.

The U.K. FTSE 100 Index dropped 0.8%, Germany’s DAX Index was down 0.5%, France’s CAC-40 Index declined 0.3%, and Spain’s IBEX 35 Index decreased 0.4%, while Switzerland’s Swiss Market Index was up 0.2% and Italy’s FTSE MIB Index gained 0.1%.

Stocks in Asia finished mostly to the downside with optimism of a U.S.-China “phase one” trade deal, which has boosted the global markets and led to a string of record highs in the U.S., continuing to fade. Also, the prospect for a trade deal was further complicated by the U.S. Senate passing legislation supporting Hong Kong protester’s as unrest has escalated as of late.

China’s Shanghai Composite Index and the Hong Kong Hang Seng Index both declined 0.8%. The markets appeared to shrug off further Chinese stimulus measures after the country lowered its 1-year loan prime rate for November. Japan’s Nikkei 225 Index traded 0.6% lower, with the yen gaining some ground, and following a report that showed the nation’s exports in October fell more than expected. South Korea’s Kospi Index fell 1.3% and Australia’s S&P/ASX 200 Index dropped 1.4%, with the banking sector seeing some pressure. However, a solid advance in telecommunications stocks lifted India’s S&P BSE Sensex 30 Index 0.5% higher.

Random Thoughts

Stocks were dealt a double dose of disappointment this week, as investors marked down many high-profile retailers following Q3 earnings and forward guidance disappointments.

At one point today, the S&P 500 fell nearly 1%, surrendering 5 of the 10 most recent new highs in the process, after Reuters reported that the Phase One trade accord between the U.S. and China might be delayed until next year.

This possibility increases investors’ already elevated skepticism of DC-initiated communications that boast of impending success. However, the resulting digestion of recent stock market gains should be viewed as a healthy reset of elevated valuations, allowing for the eventual resumption of the upward trend.

Indeed, following 20%+ YTD price gains through October since WWII, the S&P 500 rose an average 6% over the final two months of the year, logging a two-month advance 10 out of 10 times.

Market Insights 11/19/2019

U.S. stocks finished mixed, as optimism on the possibility of a U.S.-China “phase one” trade deal waned a bit due to uncertainty regarding whether if the U.S. is willing to roll back tariffs to close the deal.

Treasury yields and crude oil prices were lower, while the U.S. dollar was flat and gold finished with a modest gain.

The Markets…

The Dow Jones Industrial Average (DJIA) lost 102 points (0.4%) to 27,934

The S&P 500 Index ticked 2 points (0.1%) lower to 3,120

The Nasdaq Composite advanced 21 points (0.2%) to 8,571

In moderate volume, 837 million shares were traded on the NYSE and 2.0 billion shares changed hands on the Nasdaq

WTI crude oil tumbled $1.79 to $55.35 per barrel and wholesale gasoline shed $0.02 to $1.60 per gallon

The Bloomberg gold spot price was $0.56 higher at $1,472.07 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was nearly unchanged at 97.79

Housing construction activity increases, building permits jump to 12-year high

Housing starts for October rose 3.8% month-over-month to an annual pace of 1,314,000 units, just shy of the Bloomberg forecast of 1,320,000 units. September starts were revised higher to an annual pace of 1,266,000. Construction was solidly higher for single-unit homes and multi-unit structures. Building permits, one of the leading indicators tracked by the Conference Board as it is a gauge of future construction, jumped 5.0% m/m to an annual rate of 1,461,000, versus expectations of a 1,385,000 pace, and compared to September’s upwardly-revised 1,391,000 rate.

Treasuries were higher, as the yield on the 2-year note was little changed at 1.59%, while the yield on the 10-year note declined 2 basis points (bps) to 1.79% and the 30-year bond rate decreased 5 bps to 2.25%.

Tomorrow’s economic calendar will offer MBA Mortgage Applications, while later in the day the Federal Reserve will release the minutes from its last monetary policy meeting that concluded on October 30 with a third cut to its target for the fed funds rate this year.

Europe mixed as trade optimism fades, autos recover

European equities finished mixed in the face of fading optimism of a U.S.-China “phase one” trade deal, as reports have suggested the U.S. is reluctant to roll back Chinese tariffs, which has been a major point of contention in the negotiations. However, the auto sector, which has been hampered by slowing demand and production, rebounded to help foster some resiliency, aided by a report that showed new car registrations in the region rose solidly for the second-straight month in October.

The U.K. FTSE 100 Index rose 0.2%, Germany’s DAX Index was up 0.1%, and Switzerland’s Swiss Market Index gained 0.2%, while Spain’s IBEX 35 Index was little changed, Italy’s FTSE MIB Index declined 0.6%, and France’s CAC-40 Index decreased 0.4%.

Stocks in Asia finished mixed with the recently increased optimism regarding a “phase one” U.S.-China trade deal, which has been a major catalyst pushing the U.S. markets to record highs and sparking a rally in global equities, being dampened a bit. The uncertainty has resurfaced amid mixed headlines with the key point of contention being whether the U.S. will decide to roll back tariffs, which China has reportedly been pushing for.

China’s Shanghai Composite Index advanced 0.9% and the Hong Kong Hang Seng Index rallied 1.6%, despite escalated unrest in Hong Kong. Japan’s Nikkei 225 Index declined 0.5%, with the yen firming a bit, while South Korea’s Kospi Index decreased 0.3%. India’s S&P BSE Sensex 30 Index rose 0.5%, and Australia’s S&P/ASX 200 Index moved 0.7% higher, with the markets digesting the release of the minutes from the Reserve Bank of Australia’s (RBA) monetary policy meeting earlier this month that showed the RBA discussed the possibility of another rate cut.

Company and Earnings News…

Home Depot reported Q3 earnings-per-share of $2.53, above the $2.52 FactSet estimate, as revenues rose 3.5% year-over-year (y/y) to $27.2 billion, below the projected $27.5 billion. Q3 same-store sales grew 3.6% y/y, south of the estimated 4.7% increase, and its total transactions increased 1.5%. The world’s largest home improvement retailer noted that it saw broad-based growth across its business, yet sales were below expectations driven by the timing of certain benefits associated with its One Home Depot strategic investments.

Kohl’s Corporation posted Q3 EPS of $0.78, or $0.74 ex-items, below the projected $0.86, with revenues dipping 0.1% y/y to $4.6 billion, above the expected $4.4 billion. Q3 same-store sales increased 0.4% y/y, compared to the expected 0.9% gain. KSS lowered its full-year profit outlook, noting that it enters the holiday period with momentum and is strategically increasing its investments to take advantage of the unique opportunity to fuel growth and customer acquisition.

TJ Maxx announced Q3 earnings of $0.68 per share, topping the forecasted $0.66, as revenues grew 6.0% y/y to $10.5 billion, above the projected $10.3 billion. Q3 same-store sales increased 4.0% y/y, north of the estimated 2.3% gain. TJ Maxx raised its full-year EPS and same-store sales guidance, and although its Q4 outlook has midpoints that were south of the Street’s expectations, it added that the quarter, which includes the key holiday season, is off to a solid start.

Random Thoughts On Earnings

Investors had to contend with many conflicting issues last week, including slightly stronger-than-expected readings in consumer and producer price inflation, as well as retail sales, which were offset by a weaker-than-predicted read for industrial production and the start of the Presidential impeachment inquiry.

Yet all of this appeared to have been brushed aside when rumors spread of a soon-to-be-completed “phase one” trade deal between the U.S. and China.

The S&P 500 responded sharply by recording its ninth new all-time closing high since October 28, dragging the global benchmark with it, along with the growth, value and mid-caps indices. What’s more, seven of the S&P 1500’s 11 sectors gained on the week, though curiously led by the defensive groups.

While the broader market was hitting new price highs, S&P 500 EPS estimates for 2019 and 2020 continued to slip. Today, the S&P 500 is projected to earn $162.12 per share in 2019 versus the $171.93 estimated at the beginning of the year. EPS should rise to $176.88 by the end of 2020, even though earnings had been initially anticipated to come in at $191.23.

Finally, only one sector in the S&P 500 (consumer discretionary) saw an upward revision to its 2020 EPS estimate since September 30, along with fewer than 1/3rd of its sub-industries. Why the disconnect?

There is an old Wall Street adage that “prices lead fundamentals.” Though many strategists are likely scratching their heads wondering where are the green shoots hinting at a trend change in the EPS growth trajectory, the answer is most likely found in the expectations for a trade truce.

Until details of the deal are revealed, along with the prospects for continued conversations, EPS estimates are likely to undershoot potential.

Market Insights 11/15/2019

U.S. equities finished higher, achieving a sixth-straight week of gains, the first time since late 2017.

Treasury yields were higher and crude oil prices also gained ground, while the U.S. dollar and gold were lower.

The Markets….

Trade uncertainty, which had resurfaced and has contributed to the lackluster action in the markets this week, however it was tempered somewhat after White House advisor Larry Kudlow offered upbeat comments regarding progress toward a “phase one” U.S.-China trade deal.

The Dow Jones Industrial Average rose 223 points (0.8%) to 28,005

The S&P 500 Index increased 24 points (0.8%) to 3,120

The Nasdaq Composite advanced 62 points (0.8%) to 8,540

In moderate volume, 845 million shares were traded on the NYSE and 2.2 billion shares changed hands on the Nasdaq

WTI crude oil gained $0.95 to $57.72 per barrel and wholesale gasoline added $0.02 to $1.64 per gallon

The Bloomberg gold spot price was $4.59 lower at $1,466.81 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—fell 0.2% to 98.00

Markets were higher for the sixth-straight week, as the DJIA gained 1.2%, the S&P 500 Index advanced 0.9% and the Nasdaq Composite increased 0.8%

Retail sales mixed, industrial production falls, regional manufacturing growth unexpectedly slows

Advance retail sales for October rose 0.3% month-over-month versus the Bloomberg forecast of a 0.2% increase, and September’s 0.3% decline was unrevised. Last month’s sales ex-autos gained 0.2% m/m, compared to expectations of a 0.4% gain and September’s unrevised 0.1% dip.

Treasuries were lower as the yield on the 2-year note was up 3 basis points at 1.61%, the yield on the 10-year note increased 2 bps to 1.84%, and the 30-year bond rate ticked 1 bp higher to 2.31%, respectively.

The Federal Reserve’s industrial production fell 0.8% month-over-month in October, doubling estimates of a 0.4% decrease, and September’s favorably-adjusted 0.3% decline. This was the third monthly decline out of four as utilities production fell solidly, while manufacturing and mining output also dropped, with the former continuing to be negatively affected by a large strike in the automotive industry.

Europe higher as trade remained in focus. Asia mostly higher on trade and data

European equities finished out the week higher, as the markets continued to eye U.S.-China trade developments after White House advisor Larry Kudlow offered some upbeat comments regarding the progress as the two sides were expected to hold phone discussions today.

In economic news, the Eurozone trade surplus narrowed more than expected in September and the region’s consumer price inflation for October was revised lower. The euro and British pound were higher versus the U.S. dollar, while bond yields in the region were mixed.

Stocks in Asia finished mostly to the upside, with the global markets continuing to monitor headlines regarding progress of a U.S.-China “phase one” trade deal, of which resurfacing uncertainty has stymied sentiment this week. White House economic adviser Larry Kudlow noted yesterday that a deal was getting close, though a Chinese Ministry of Commerce spokesperson was cited as saying the rolling back of tariffs is key to an agreement.

China’s Shanghai Composite Index declined 0.6% and the Hong Kong Hang Seng Index finished flat after a string of losses that have come from the escalated unrest in the province. Australia’s S&P/ASX 200 Index advanced 0.9% and India’s S&P BSE Sensex 30 Index nudged 0.2% higher ahead of some trade data as the markets were closing, which showed the decline in exports decelerated in October. Lastly, South Korea’s Kospi Index rose 1.1%.

Stocks extend weekly winning streak

U.S. stocks posted a sixth-straight week of gains for the first time since late 2017, with resurfaced trade uncertainty being tamped down late in the week by upbeat comments regarding progress on a “phase-one” U.S.-China trade deal from White House advisor Larry Kudlow.

Q3 earnings season continued down the home stretch and remained a buoy for the markets, with upbeat chip sector results continuing to pour in and Dow member Walmart topping earnings estimates and raising its full-year guidance heading into the key holiday shopping season, to more than offset a disappointing outlook from Dow component Cisco Systems. Thus far, of the 461 S&P 500 companies that have reported Q3 results, about 59% have topped revenue forecasts and roughly 79% have exceeded earnings estimates, per data compiled by Bloomberg.

Treasury yields and the U.S. dollar trimmed last week’s rallies, while gold and crude oil prices finished little changed. Real estate, communications services, information technology and healthcare stocks led the week’s gains, while the financials, consumer discretionary and energy sectors moved lower.

Next week, with earnings season creeping closer to the finish line, the economic calendar will likely dominate market attention, along with a persistent eye on the trade front. Housing will be in focus, courtesy of the releases of the NAHB Housing Market Index, housing starts and building permits, and existing home sales. We will get looks at the minutes from the Fed’s October 30th monetary policy meeting, the Leading Index, jobless claims, the Philly Fed Manufacturing Index, Markit’s preliminary November Manufacturing and Services PMIs, and the final University of Michigan Consumer Sentiment Index for November.

Market Insights 11/13/2019

U.S. equities finished mixed, as testimony from Fed Chairman Jerome Powell on Capitol Hill, in which he noted that the current stance is likely to remain appropriate supported sentiment.

Treasury yields were lower following consumer price inflation data that suggested pricing pressure remain subdued. The U.S. dollar nudged higher, while gold and crude oil prices also gained ground.

The Markets…

The Dow Jones Industrial Average increased 9 points (0.3%) to 27,780

The S&P 500 Index ticked 2 points (0.1%) higher to 3,094

The Nasdaq Composite lost 4 points (0.1%) to 8,482

In moderate volume, 798 million shares were traded on the NYSE and 2.1 billion shares changed hands on the Nasdaq

WTI crude oil gained $0.32 to $57.12 per barrel and wholesale gasoline was up $0.03 at $1.64 per gallon

The Bloomberg gold spot price was $7.44 higher at $1,463.78 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—increased 0.1% to 98.36

Consumer price inflation rises, mortgage applications jump

The Consumer Price Index (CPI) rose 0.4% month-over-month in October, above the Bloomberg estimate calling for a 0.3% rise, and versus September’s unrevised flat reading. The core rate, which strips out food and energy, was 0.2% higher m/m, matching expectations and compared to September’s unadjusted 0.1% rise. Y/Y, prices were 1.8% higher for the headline rate, above forecasts calling for it to match September’s unadjusted 1.7% increase.

The MBA Mortgage Application Index jumped 9.6% last week, following the prior week’s 0.1% dip. The solid gain came as a 12.9% surge in the Refinance Index was met with a 5.1% gain for the Purchase Index. The average 30-year mortgage rate rose 5 basis points to 4.03%.

Treasuries finished higher, as the yield on the 2-year note decreased 3 bp to 1.63%, while the yields on the 10-year note and the 30-year bond declined 4 bps 1.87% and 2.35%, respectively.

The markets scrutinized today’s address by Federal Reserve Chairman Jerome Powell to the Congressional Joint Economic Committee, which began his two-day economic and monetary policy testimony on Capitol Hill. Powell noted that the current stance of monetary policy is likely to remain appropriate, but “noteworthy risks to this outlook remain.” Powell added that low rates may limit the ability of monetary policy to support economic growth and continued to point out that fiscal policy would be an important support in a downturn.

Tomorrow, the economic calendar will hold the Producer Price Index (PPI), forecasted to have gained 0.3% m/m during October following September’s 0.3% decline, while the core rate, which excludes food and energy, is anticipated to have increased 0.2% m/m after dropping 0.3% the month prior. Weekly initial jobless claims are also on tap, projected to increase by 4,000 to 215,000. As well, Fed Chair Jerome Powell will deliver his second day (of two) of monetary policy testimony on Capitol Hill.

Europe down on Hong Kong unrest, resurfacing trade uncertainty and data

European equities were lower, as the global markets continued to eye the escalating unrest in Hong Kong, while U.S.-China trade uncertainty resurfaced amid the void of any new clarity on the timing of a potential signing of a “phase one” trade agreement. The euro and British pound were lower versus the U.S. dollar, while bond yields in the region were mixed.

Stocks in Asia finished lower with the escalated unrest in Hong Kong continuing to weigh on sentiment, while the lack of further details regarding when/if a “phase one” U.S.-China trade agreement will be put in writing appeared to also stymie conviction following the recent rally in the global stock markets.

China’s Shanghai Composite Index declined 0.3% and the Hong Kong Hang Seng Index fell 1.8%. Australia’s S&P/ASX 200 Index traded 0.8% to the downside and South Korea’s Kospi Index dropped 0.9%. India’s S&P BSE Sensex 30 Index decreased 0.6% in a return to action following yesterday’s holiday break.

Fed Chairman; Jerome Powell

Fed Chair Powell’s comments before the Joint Economic Committee came as no surprise to Fed watchers.

The Chairman said that the baseline outlook for the U.S. economy was favorable, though noteworthy risks remain. The moderate Q3 GDP gain was restrained in part by the UAW strike, as well as by weakness in global growth and the trade war.

He also cited muted inflation as a potential concern and said that while the risk to the financial system remains moderate, the corporate debt load is uncomfortably high. He warned that the Federal budget is on an unsustainable path and that low rates may limit the Fed’s ability to support the economy in another downturn.

On the positive side, the Chair said household consumption continues to be supported by a healthy job market, rising incomes and solid consumer confidence. Action Economics currently forecasts no additional rate cuts in 2019 or 2020.

Market Insights 11/12/2019

U.S. equities finished mostly higher and nearly unchanged in another lackluster trading session.

Treasury yields were modestly lower after yesterday’s holiday break, and as small business optimism improved slightly more than expected.

Gold prices finished positive and the U.S. dollar was higher, while crude oil prices were little changed.

The Markets…

The Dow Jones Industrial Average was unchanged at 27,691

The S&P 500 Index increased 5 points (0.2%) to 3,092

The Nasdaq Composite gained 22 points (0.3%) to 8,486

In moderate volume, 790 million shares were traded on the NYSE and 1.9 billion shares changed hands on the Nasdaq

WTI crude oil ticked $0.06 lower to $56.80 per barrel and wholesale gasoline was unchanged at $1.61 per gallon

The Bloomberg gold spot price was $2.69 higher at $1,458.55 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—increased 0.1% to 98.34

Small business optimism ticks higher in October

The National Federation of Independent Business (NFIB) Small Business Optimism Index for October rose to 102.4 from September’s unrevised 101.8 level, and compared to the Bloomberg expectation of an increase to 102.0.

Treasuries were modestly higher following yesterday’s holiday break and a recent drop, as the yield on the 2-year note dipped 2 basis points to 1.65%, while the yields on the 10-year note and the 30-year bond were 3 bps lower at 1.92% and 2.39%, respectively.

Tomorrow, investors will get the first look at the October inflation picture, courtesy of the Consumer Price Index (CPI), forecasted to show prices rose 0.3% month-over-month (m/m) following the flat reading posted in September, while the core rate, which strips out the volatile food and energy components, is anticipated to have gained 0.2% m/m after ticking 0.1% higher m/m the month prior. MBA Mortgage Applications are also slated for release.

Europe mostly higher on reports U.S. may delay auto tariffs and data

European equities finished mostly higher amid some apparent caution ahead of the afternoon speech from U.S. President Donald Trump, while reports that the U.S. could delay a decision on imposing tariffs on the region’s auto sector also seemed to somewhat support sentiment.

Plus, the markets continued to focus on the recently increased optimism regarding a U.S.-China “phase one” trade agreement. The euro was lower versus the U.S. dollar, while the British pound gained ground on the greenback.

The U.K. FTSE 100 Index rose 0.5%, Germany’s DAX Index was up 0.7%, France’s CAC-40 Index rose 0.4%, Italy’s FTSE MIB Index rallied 1.2%, and Switzerland’s Swiss Market Index ticked 0.1% higher, while Spain’s IBEX 35 Index declined 0.9%.

Stocks in Asia finished mostly higher after slipping yesterday on disappointing economic data out of China, Japan and India, with the markets continuing to monitor the prospect of a U.S.-China “phase one” trade deal, as well as the escalated unrest in Hong Kong.

Japan’s Nikkei 225 Index rose 0.8%, with the yen slipping, while South Korea’s Kospi Index also moved 0.8% to the upside.

China’s Shanghai Composite Index advanced 0.2% and the Hong Kong Hang Seng Index gained 0.5%, trimming some of yesterday’s drop.

Market Insights 11/11/2019

U.S. equities finished mixed, staging somewhat of a midday comeback off the lows after posting a fifth-straight weekly gain and all-time highs for the three major indexes last week.

The U.S. dollar was lower, as were gold and crude oil prices.

The Markets…

The Dow Jones Industrial Average rose 10 points to 27,691

The S&P 500 Index decreased 6 points (0.2%) to 3,087

The Nasdaq Composite declined 11 points (0.1%) to 8,464

In moderate volume, 760 million shares were traded on the NYSE and 1.7 billion shares changed hands on the Nasdaq

WTI crude oil lost $0.38 to $56.86 per barrel and wholesale gasoline shed $0.02 to $1.61 per gallon

The Bloomberg gold spot price was $3.56 lower at $1,455.44 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—declined 0.2% to 98.20

Economic front and bond markets take a break before heavy week

The U.S. bond markets were closed in observance of the Veterans Day Holiday.

The economic calendar was empty today, but the docket will remain robust this week with an emphasis on inflation and consumer spending for October, courtesy of the Consumer Price Index (CPI), the Producer Price Index (PPI) and the Import Price Index, as well as retail sales.

While volatility has remained subdued and U.S. stocks are at all-time highs, a near-term concern is that investor sentiment may be getting a bit too frothy. The potential signing of a “phase one” U.S.-China trade deal and rollback of some tariffs has contributed substantially to the rally; yet the proposals made have yet to be corroborated by anything in writing.

Europe mixed following data and amid resurfaced trade and geopolitical concerns

European equities finished mixed amid divergent headlines as of late that seemed to foster some uncertainty regarding a “phase one” U.S.-China trade deal, while the escalated unrest in Hong Kong that turned violent over the weekend appeared to also weigh on sentiment. U.K. economic and earnings data was also heavy and painted a mixed picture, with the region’s Q3 GDP rebounding back into expansion territory, posting a 0.3% quarter-over-quarter pace of growth, after contracting 0.2% in Q2, but missing the expected 0.4% increase.

The U.K. FTSE 100 Index fell 0.4%, Germany’s DAX Index and Italy’s FTSE MIB Index were down 0.2%, and Spain’s IBEX 35 Index dipped 0.1%, while Switzerland’s Swiss Market Index was little changed and France’s CAC-40 Index gained 0.1%.

Stocks in Asia finished lower to kick off the week, with U.S.-China trade uncertainty resurfacing amid mixed headlines regarding the likelihood of a “phase one” trade agreement, while a violent turn in protests in Hong Kong appeared to further stymie sentiment. Economic data was also in focus and painted a mostly downbeat tone.

China’s Shanghai Composite Index fell 1.8% and the Hong Kong Hang Seng Index dropped 2.6%. Japan’s Nikkei 225 Index decreased 0.3% and South Korea’s Kospi Index declined 0.6%. However, India’s S&P BSE Sensex 30 Index ticked 0.1% higher and Australia’s S&P/ASX 200 Index advanced 0.7%.

U.S. Market Weekly Summary – Week Ending 11/08/2019

S&P 500 Posts 0.9% Weekly Gain to Another Record, Led by Financials, Materials, Energy, Industrials

The Standard & Poor’s 500 index rose 0.9% this week to another record close as the financial, materials, energy and industrial sectors led a fairly broad climb amid continued enthusiasm over better-than-expected quarterly earnings results.

The market benchmark ended the week at 3,093.08, up from last week’s closing level of 3,066.91. The measure reached another record intra-day high this week, this time at 3,097.77 on Thursday, while Friday’s closing level marks another fresh closing high. The S&P 500 is now up 23% for the year to date.

The market has been reaching the new highs on improved investor sentiment as many companies’ Q3 earnings reports have been coming in better than expected while recent economic data have also shown encouraging signs. Friday, the University of Michigan’s preliminary reading of consumer sentiment for November showed a slight improvement from late October.

The financial sector had the largest percentage gain of the week, up 2.4%, followed by materials and energy, up 2.0% each, and industrials, up 1.8%. Four sectors ended the week in the red: real estate, down 3.7%; utilities, down 3.7%; consumer staples, down 0.5%; and consumer discretionary, down 0.2%.

The financial sector’s gainers included Hartford (HIG), whose shares climbed 6.2% as the US insurance company reported Q3 results that topped Wall Street expectations. The stock received increases to its price targets from RBC Capital Markets and Morgan Stanley following the better-than-expected report.

In the industrial sector, the week’s advancers included Huntington Ingalls Industries (HII), whose shares rose 9.1% on the week as the company reported Q3 diluted earnings per share that, while down from the year-earlier quarter, were still higher than the EPS consensus estimate from analysts polled by Capital IQ. The defense shipbuilding company’s Q3 revenue also came in slightly better than analysts’ mean estimate and CEO Mike Petters expressed confidence in the company’s ability to achieve shipbuilding margins of 9% to 10% in 2020.

On the downside, the real-estate sector’s decliners included Ventas (VTR), which received a reduction to its price target from RBC Capital Markets to $64 from $71.

In the utilities sector, shares of Pinnacle West Capital (PNW) fell 7.6% as the company reported Q3 earnings and revenue below analysts’ mean estimates. The company also warned it doesn’t expect to reach the lower end of its full-year EPS guidance range due to milder-than-normal weather conditions.