Bright spirits. It’s the week of Christmas, and investors’ spirits are bright. The S&P 500 Index has climbed 2.6% so far this month, poised for its best December since 2010. The calendar is quiet through the end of the year, and we’re now in one of the S&P 500’s strongest weeks historically. Since 1950, the S&P 500 has gained an average of 0.6% in the 52nd calendar week of the year.
Durable goods data disappoints. Consumer and business demand contracted in November, according to preliminary durable goods data for November. Durable goods orders unexpectedly fell 2% last month, missing consensus estimates for a 1.5% rise. Orders for nondefense capital goods (excluding aircraft), which we use to gauge capital expenditures, fell 1.1% year over year, showing business spending is still tepid.
Profit growth is key. Clarity from the phase one trade deal with China and United Kingdom election results could help shift stock market performance drivers more toward investing fundamentals in 2020. We expect stocks to appreciate in line with earnings growth next year, which we think justifies benchmark-like equity allocations. Find out more in the new Weekly Market Commentary: Profit Growth Key for 2020 Stocks. (client approved)
Seasonal lift. The S&P 500 rose for the 10th time in 11 weeks and the 10-year U.S. Treasury yield touched a six-week high as trade progress buoyed risk sentiment. For a review of all major index performance, see the latest Weekly Market Performance: Seasonal Lift. (client approved)
The week ahead. This week, the U.S. economic calendar is sparse as 2019 winds down. The stock market will close early December 24 and will be closed December 25. Then, initial jobless claims are scheduled to be released on Thursday. Internationally, key data points include retail sales, employment, and industrial production data for Japan, and China’s industrial profits on Thursday. German retail sales data is slated for Friday.
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