Trade continues to lead headlines. The S&P 500 Index is set to open modestly lower amid concerns of impending December tariffs as investors continue to watch trade developments. Overnight, a Chinese commerce official told reporters that China hopes it can reach a trade agreement with the United States that satisfies all sides “as soon as possible,” as China’s exports unexpectedly dropped 1.1% in November year over year, and Chinese shipments to the U.S. fell by 23%. Meanwhile, White House economic adviser Larry Kudlow reiterated that the U.S. and China are “close” to a trade deal. The removal of the U.S.’s existing tariffs, China’s meaningful purchase of agricultural products, and recent complications concerning the U.S.’s legislation on Hong Kong are key near-term stumbling blocks. However, consensus expectations revolve around a near-term phase-one trade deal.
Federal Reserve set for a pause. The Federal Open Market Committee is set to meet December 10 and 11. The Federal Reserve (Fed) lowered the fed funds rate by 0.25% in each of the past three meetings to provide a cushion for the U.S. economy while a broader global slowdown continued. However, amid Friday’s better than expected jobs report and recent data highlighting that inflation remains muted, the Fed is likely to leave rates unchanged.
U.S. economy ambles along. U.S. economic growth has slowed in 2019, but it’s still growing. In this week’s Weekly Market Commentary: Ambling Along in 2020, we look at factors impacting the economy now and the trends we expect to continue in 2020.
Jobs report sparked late-week rally. The S&P 500 eked out a small weekly gain last week thanks to Friday’s rally on the November jobs report. The Russell 2000 Index of small caps led U.S. index returns for the second straight week, and long-term yields bounced back. Oil prices reached their highest level since the September attacks on Saudi Arabia’s oil facilities. Read the Weekly Market Performance: Jobs Report Sparks Rally for a complete summary of major index performance.
Week ahead. This week, the U.S. economic calendar will bring data on small business confidence and productivity on Tuesday, the Fed’s policy announcement on Wednesday, consumer and producer inflation on Wednesday and Thursday, and retail sales data on Friday. Internationally, investors will be watching for Japanese gross domestic product, German trade data, and China inflation data on Monday. The United Kingdom’s general election and the European Central Bank meeting are scheduled on Thursday, when investors will also get a look at Eurozone industrial production.
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