An extremely volatile week with mixed results

Market Recap Week ending 12/06/2019

It was a mixed bag of results for the major US indices in what was an extremely volatile week for investors.  After what was a great showing in November for the markets, investors took profits early in the week as US manufacturing data disappointed and comments made by President Trump dampened sentiment on a trade deal.  The S&P 500 fell over 2% on Monday but was able to recover those losses and gain some ground by the end of the week.  Renewed trade optimism, a very robust Employment situation report, and a strong showing from the Energy sector prompted the rally.  For the week, the S&P gained 0.16%, the Dow fell -0.10%, the NASDAQ shed -0.13%, and the Russell 2000 led with a gain of 0.57%.  US Treasuries were relatively quiet; the 2-year note yield increased by two basis points to close at 1.63%, and the 10-year bond yield gained one basis point to close at 1.84%.  Gold lost a $4.90 to close at 1465.50 an Oz.  Oil had a huge move, gaining over 7% on the week, with WTI closing at $59.20 a barrel as OPEC agreed to significant production cuts.   There were no changes to our models last week.

Early in the week, President Trump cast doubt on an interim deal with China when he suggested a deal might be better to take place after the November election.  A protectionism statement was also made later in the week when the White House announced new tariffs on Argentine and Brazilian goods after the two counties devalued their currency.  This new set of duties comes on the back of those recently levied on French goods.  On Friday, the Chinese did announce the suspension of some tariffs on US agricultural products, which turned trade sentiment back to the glass half full type. 

The week started with a dimmer than expected look on US Manufacturing.  The ISM Manufacturing index for November came in at 48.1% versus an expectation of 49.2%.  A reading below 50 suggests contraction.  The report also marked the 4th straight month of declines in the new orders component.  On the other hand, November ISM Non- Manufacturing came in at 53.9%, it missed the consensus estimate and is below the October reading but a reading above 50 indicates expansion.  The New Orders and Employment components of the report showed signs of acceleration.  The Employment Situation report was solid.  Non-Farm Payrolls came in at 266,000 versus expectations of 182,000.  The Unemployment rate fell to 3.5% versus expectations of 3.6% and Average hourly earnings were up 0.2%. 

Darren Leavitt, CFA

Portfolio Manager

& Sr. Market Analyst