US Equity Markets closed last week within 1% of all-time highs, as President Trump pushed back tariffs on China by two weeks, China offered conciliatory trade comments, and US economic data remained quite healthy. As a result, the S&P 500 rose 1.0% for the week to bring its gains for the year up to 20.0%. The Nasdaq was up 0.9% for the week and is now up 23.2% for the year, while the Russell 2000 (small-cap stocks) surged 4.9% for the week amid rising confidence in the US economy and is now up 17.0% for the year.
Global equity markets posted strong returns last week as well, as the improving trade outlook combined with the announcement by the European Central Bank (ECB) of additional monetary stimulus measures to boost equities. Developed Markets rose 1.9% for the week to bring its gains for the year up to 12.3%. Emerging Markets also increased 1.9% for the week and are now up 6.3% for the year.
US interest rates rose sharply last week, as US economic concerns eased. US Retail Sales for the month of August rose a much-better-than-expected 0.4%, Initial Jobless Claims fell notably, Core Consumer inflation data (CPI) came in higher than projected, and measures of US consumer sentiment were better than forecasts. As a result, the yield on the US 10-Year Treasury rose to 1.90% from 1.56% the prior week. Given recent headlines, we note that the yield curve is not inverted currently, having steepened last week to 0.11% compared to 0.04% the prior week.
Of Interest to Us
The rally in the equity markets last week came from areas that had been notably under-performing....US Small Cap (up 4.9% for the week), US Mid-Cap (up 2.7%), traditional "Value" stocks (up 2.4%), the Financial sector (up 3.9%), the Energy sector (up 3.4%), the Transportation sector (up 5.0%). Expanding breadth in the market has typically been a positive indicator of future market returns. While one week does not make a trend, if these under-performing areas continue to play "catch up," that has the potential to be very good for the broader equity markets.
Market Data
for the week ending 9/13/2019
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