The week opened with losses. The Dow industrials shed 268 points on Monday and 280 more on Tuesday after President Trump said a trade deal could wait until after the 2020 election. By Wednesday, optimism over trade returned and stocks rose, bolstered on Friday by a strong jobs report aided by the return of striking General Motors workers. So much for ugly losses. For the week, the Dow slipped 36 points or 0.13%; the S&P 500 gained 0.16% to 3,145.91; and the Nasdaq Composite lost 0.1%. Small-cap stocks rebounded a bit. Crude oil gained $4.03/bbl. as the OPEC and Russian-led group agreed to cut an additional 500,000 barrels of oil a day after a contentious meeting in Vienna and extend the cuts through the end of March. The announcement sent energy stocks higher by 1.6%, second only to telecommunication stocks, which led the pack at 1.72%.
Non-farm payrolls jumped by 266,000, nearly 100,000 more than economists had forecast, and there were upward revisions totaling 41,000 for the previous two months. However, given that the jobs number is a trailing economic indicator, traders are betting that the slowdown in growth that occurred in 2019 will end in 2020. On Wednesday, we’ll get a chance to hear what the Federal Reserve thinks about all this following its two-day meeting on monetary policy. Almost no one expects another interest-rate cut, but everyone will be examining the changes in the central bank’s statement and parsing every word from Fed Chairman Jerome Powell.
Meanwhile, the bulls briefly stumbled as November ended and December began. So, after weeks in which one record after another was set, the profit takers returned, motivated by worries about securing a partial trade deal with China and slowing economic growth. At this point, though, the fundamentals remain sound, suggesting that this may be just a short-term readjustment. For now, I would use any weakness as an opportunity to pick up stocks at more attractive prices.
Here is the answer to last week’s trivia question: Eddie Bauer founded his namesake company in Seattle, Washington in 1920. Today, the iconic brand is owned by? Sears Holdings, Golden Gate Capital, Cabela’s or the Bauer family. Answer: Golden Gate Capital, which also owns Red Lobster, Bob Evans Restaurants, Mavis Discount Tire and Pacific Sunwear, among others.
Today’s Trivia Question: Philip Morris split into two companies in 2003: Altria and Philip Morris International. Philip Morris International retained its headquarters in New York City and Altria moved its NYC base to? Raleigh, NC, Fredericksburg, VA, Winston-Salem, NC, or Richmond, VA.