Month: December 2019

Equities opened the week with small losses. The Russell 2000 Index declined 0.30 percent, while the S&P 500 Index slipped 0.58 percent. The S&P 500 Index has gained 28.50 percent for the year through Monday’s close.

The technology sector should finish the year as the best performing major sector. SPDR Technology (XLK) currently has a 49.46 percent gain in 2019. Among the larger sectors (as a percentage of the S&P 500 Index) SPDR Financials (XLF) follows with an increase of 31.49 percent.  SPDR Healthcare (XLV) has risen 20.19 percent. Falling interest rates helped SPDR Utilities (XLU) climb 25.41 percent. The laggard this year is energy. SPDR Energy (XLE) has gained only 11.07 percent.

iShares PHLX Semiconductors (SOXX) has rallied 61.83 percent, iShares Expanded Tech Software (IGV) 33.89 percent and Invesco Nasdaq Internet (PNQI) 28.70 percent on the year.

Low volatility and high-quality dividend shares were strong performers. iShares Edge MSCI Minimum Volatility USA (USMV) has a return of 27.41 percent, Vanguard Dividend Appreciation (VIG) 29.50 percent and WisdomTree U.S. Quality Dividend Growth (DGRW) 29.38 percent.

The U.S. beat most foreign developed and emerging markets in 2019. iShares MSCI EAFE (EFA) and iShares MSCI Emerging Markets (EEM) have gained of 21.52 percent and 17.96 percent. While excellent returns, domestic stocks remain the best bet for investors. The U.S. Dollar Index has risen more than 4 percent.

Bonds performed well thanks to falling interest rates. iShares iBoxx High Yield Corporate Bond (HYG) has increased 13.97 percent heading into the last day of trading. Fidelity Corporate Bond (FCOR) has rallied 15.22 percent and Invesco Senior Loan (BKLN) 9.93 percent.

This week will be holiday shortened again with the New Year’s holiday falling on Wednesday.  This will delay economic data including the employment report that typically comes on the first Friday of a month.

The Conference Board’s consumer confidence survey for December is out on Tuesday. Manufacturing PMIs will be out on Thursday and Friday, along with motor vehicle sales for December. The minutes of the last FOMC meeting will also be released on Friday.

There are no earnings of note this week. Earnings season will kick into high gear mid-month with several major banks reporting.

The Santa Claus rally did not disappoint, lifting stocks to new all-time highs. The Nasdaq closed above the 9000 level for the first time in history. It was also the best performing major index on the week, gaining 0.95 percent. The Dow Jones Industrial Average increased 0.68 percent and the S&P 500 Index 0.60 percent.

Consumer discretionary was the best performing sector this week propelled by the 4.63 percent return from Amazon (AMZN). SPDR Consumer Discretionary (XLY) gained 1.22percent. SPDR Technology (XLK) rose 1.11 percent.

November new home sales hit an annualized pace of 719,000, up from 710,000 in October. Still, iShares U.S. Home Construction (ITB) slipped 0.67 percent.

The U.S. Dollar Index declined 0.64 percent on the week. The weaker dollar helped iShares MSCI Emerging Markets (EEM) rally 1.08 percent and iShares MSCI EAFE (EFA) 0.69 percent. iShares MSCI United Kingdom (EWU) extended its post-election run with an increase of 1.43 percent. iShares China Large-Cap (FXI) added to its post-trade deal advance with a return of 1.37 percent.

Commodities continued their winning ways in the wake of the recent trade deal and strong economic data. Global X Copper Miners (COPX) climbed 2.54 percent, Global X Silver Miners (SIL) 8.18 percent, VanEck Gold Miners (GDX) 7.09 percent, SPDR S&P Oil & Gas Equipment & Services (XES) 2.40 percent and VanEck Agribusiness (MOO) 1.01 percent.

The 10-year Treasury yield fell to 1.87 percent this week. The dip in yields boosted bonds across the board. Fidelity Corporate Bond (FCOR) climbed 0.35 percent, iShares iBoxx High Yield Corporate Bond (HYG) 0.26 percent and Invesco Senior Loan (BKLN) 0.03 percent.

Equities extended their gains on Monday after China cut tariffs on pork and technology imports. The Dow Jones Industrial Average increased 0.34 percent. The S&P 500 and NASDAQ gained 0.09 and 0.23 percent, respectively.

Crude oil held steady at $60.64 on Monday, but SPDR Energy (XLE) rallied 1.01 percent. Independent oil producer Apache (APA) rose 17.46 percent after announcing a 50-50 offshore oil joint venture with Total SA. SPDR Industrial (XLI) advanced 0.76 percent after Boeing (BA) fired its CEO. Boeing shares climbed 2.91 percent. SPDR Healthcare (XLV) returned 0.37 percent. SPDR S&P Pharmaceuticals (XPH) increased 1.95 percent and SPDR S&P Biotech (XBI) 1.05 percent.

Stocks are entering a seasonally strong period. The final four trading days of December and the first two of January are historically very positive for stocks. This six-day period has seen stocks rise 76 percent of time since 1896, versus only 55 percent for the average six-day period. The average gain has been 1.49 percent over the “Santa Claus Rally” period, more than 10 times the average of all six-day periods.

New homes sales missed expectations, but November’s annualized pace of 719,000 was higher than October’s pace. iShares U.S. Home Construction (ITB) fell 1.12 percent on the day. The only other economic data scheduled this week is the weekly initial unemployment claims.

The 10-year Treasury yield climbed to 1.94 percent on Monday. Corporate, investment grade, floating rate and high-yield bond funds all advanced on Monday, let by the 0.05-percent gain in iShares iBoxx High Yield Corporate Bond (HYG). iShares 20+ Year Treasury Bond (TLT) slid 0.15 percent.

Note: The stock market will close at 1 PM on Tuesday and will re-open on Thursday.