U.S. equities finished higher, achieving a sixth-straight week of gains, the first time since late 2017, despite a mixed retail sales report, another drop in industrial production, and an unexpected deceleration in regional manufacturing growth. Trade uncertainty, which had resurfaced and has contributed to the lackluster action in the markets this week, was tempered somewhat after White House advisor Larry Kudlow offered upbeat comments regarding progress toward a “phase one” U.S.-China trade deal. In equity news, Applied Materials delivered another dose of upbeat results from the semiconductor sector and billionaire investor Warren Buffett’s Berkshire Hathaway disclosed a stake in RH. Treasury yields were higher and crude oil prices also gained ground, while the U.S. dollar and gold were lower.
The Dow Jones Industrial Average (DJIA) rose 223 points (0.8%) to 28,005, the S&P 500 Index increased 24 points (0.8%) to 3,120 and the Nasdaq Composite advanced 62 points (0.8%) to 8,540. In moderate volume, 845 million shares were traded on the NYSE and 2.2 billion shares changed hands on the Nasdaq. WTI crude oil gained $0.95 to $57.72 per barrel and wholesale gasoline added $0.02 to $1.64 per gallon. Elsewhere, the Bloomberg gold spot price was $4.59 lower at $1,466.81 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—fell 0.2% to 98.00. Markets were higher for the sixth-straight week, as the DJIA gained 1.2%, the S&P 500 Index advanced 0.9% and the Nasdaq Composite increased 0.8%.
Advance retail sales for October rose 0.3% month-over-month (m/m), versus the Bloomberg forecast of a 0.2% increase, and September’s 0.3% decline was unrevised. Last month’s sales ex-autos gained 0.2% m/m, compared to expectations of a 0.4% gain and September’s unrevised 0.1% dip. Sales ex-autos and gas ticked 0.1% higher m/m, compared to estimates of a 0.3% gain, and September’s flat reading was adjusted to a 0.1% dip. The control group, a figure used to calculate GDP, was up 0.3%, matching projections, and compared to September’s downwardly-adjusted 0.1% decline. Sales of furniture, electronics and appliances, building materials, clothing, and sporting goods all declined, but motor vehicles sales rose and sales at non-store retailers—which include online shopping—were up solidly and came in 14.3% higher compared to the same period a year ago.
The Federal Reserve’s industrial production fell 0.8% month-over-month (m/m) in October, doubling estimates of a 0.4% decrease, and September’s favorably-adjusted 0.3% decline. This was the third monthly decline out of four as utilities production fell solidly, while manufacturing and mining output also dropped, with the former continuing to be negatively affected by a large strike in the automotive industry. Capacity utilization decreased to 76.7% from the prior month’s unrevised 77.5% rate, and versus the expected 77.0%. Capacity utilization is 3.1 percentage points below its long-run average.
The Import Price Index declined 0.5% m/m for October, versus projections of a 0.2% decrease, and following September’s downwardly-revised 0.1% gain. Compared to last year, prices fell 3.0%, compared to forecasts of a 2.2% drop and September’s negatively-revised 2.1% decrease.
The Empire Manufacturing Index, a measure of activity in the New York region, declined to a level of 2.9 during November from the unrevised 4.0 posted in October, and below the 6.0 forecasted, with a reading above zero denoting expansion in activity.
Treasuries were lower, as the yield on the 2-year note was up 3 basis points (bps) at 1.61%, the yield on the 10-year note increased 2 bps to 1.84%, and the 30-year bond rate ticked 1 bp higher to 2.31%, respectively.
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