Week In Review 11.15.2019

Equity markets generally ended the week lower, with the exception of U.S. large cap stocks. The S&P 500 recorded its sixth consecutive week of gains, the longest such streak in two years, while closing out the week with three consecutive record highs. In addition, the Dow Jones Industrial Average closed above 28,000 for the first time ever. Comments by the White House suggesting that a trade deal between the U.S. and China was close to being finalized helped propel the indices.Speaking before Congress, Fed Chair Jay Powell intimated that the Fed is unlikely to lower rates again in the near-term due to the “sustained expansion of economic activity”. That did not come as a surprise given that the Fed has lowered rates at each of its last three meetings and Chair Jay Powell previously described the July rate cut as a “mid-course correction”.

Chinese data released during the week suggested that the effects of the current trade war continue to weigh on economic growth. Industrial production, retail sales, and fixed asset investment (large-scale infrastructure spending) all missed consensus expectations and declined from the prior month. The 5.2% growth in fixed asset investment was the weakest in at least two decades.

Through Friday, 92% of S&P 500 companies had reported third quarter earnings. Thus far, 75% of companies that have reported have beaten their earnings estimates, while 60% have beaten their revenue estimates. For the full quarter, S&P 500 earnings are expected to decline -2.3% from 3Q18.