Stocks Muted, Big Week Ahead – Weekly Update

January 29, 2019 | By Steven DiGregorio

For the first time in months, U.S. markets experienced little movement last week.[1]The Dow and NASDAQ did have their 5th week of gains in a row, but their increases were small: 0.12% and 0.11%, respectively. Meanwhile, the S&P 500 broke its 4-week winning streak with a 0.22% loss.[2] Internationally, the MSCI EAFE also posted modest returns, gaining 0.47% for the week.[3]

What topics were on investors’ minds?

Despite the relative lack of market drama last week, investors still had plenty to consider. For example, the following details emerged:

  • Conflicting messages came out on trade tension with China.
  • The International Monetary Fund (IMF) downgraded its forecast for global growth.
  • Corporate earnings season continued.[4] 

In addition, the longest federal government shutdown in history ended. After 35 days, the House and Senate voted unanimously to reopen the partially closed government. President Trump signed the bill, which includes funding through February 15.[5] 

This week could provide far more action in the markets when a number of key details emerge.[6] 

What’s ahead this week?

These last days of January provide several noteworthy updates, including:

  • Federal Reserve Meeting: Most people expect that the Fed will not increase rates this week. However, many investors will be studying how the central bank describes its plans for 2019 and assessment of the economy’s strength.[7] 
  • Corporate Earnings: This week, 126 S&P 500 companies will release their earnings data.[8] Major reports could help provide insight into everything from U.S. consumers to global industry.[9]
  • China Negotiations: Chinese Vice Premier Liu and his delegation are coming to Washington to conduct additional trade discussions.[10] As we have discussed for months, the ongoing tension is affecting markets as investors look for clarity on what may lie ahead.[11] 

One data point we may not receive this week is the initial reading of 4th quarter 2018 Gross Domestic Product.[12] This report is one of many affected by the federal government shutdown. Although the government has reopened, we have yet to receive the latest data on retail sales, new home sales, durable goods orders, and more.[13] 

As the week unfolds, we will analyze all of the information that does come out – and continue to look for ways to pursue our clients’ long-term goals in the current economic environment. If you have any questions about how these details affect your financial life, we’re here to talk.

ECONOMIC CALENDAR*
Tuesday: Consumer Confidence
Wednesday: ADP Employment Report, GDP
Thursday: Jobless Claims
Friday: Motor Vehicle Sales, PMI Manufacturing Index, ISM Mfg Index, Construction Spending, Consumer Sentiment
*The federal government shutdown may delay some data releases.

Notes: All index returns (except S&P 500) exclude reinvested dividends, and the 5-year and 10-year returns are annualized. The total returns for the S&P 500 assume reinvestment of dividends on the last day of the month. This may account for differences between the index returns published on Morningstar.com and the index returns published elsewhere. International performance is represented by the MSCI EAFE Index. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.

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International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.

The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.

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Tags: China, DJIA, Dow, Earnings, FOMC, GDP, Government Shutdown, NASDAQ, S&P 500, Trade

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STEVEN M DIGREGORIO is President of Compass Asset Management Group, LLC and an Investment Advisor Representative with Spire Wealth Management, LLC.
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