Market Perspective for January 10, 2020

Equities extended their 2020 winning streak, with the Nasdaq increasing 1.74 percent. The S&P 500 Index returned 0.93 percent and the Dow Jones Industrial Average 0.66 percent.

Technology powered the market gains. SPDR Technology (XLK) rallied 2.18 percent. Software led among the subsectors as iShares Expanded Tech Software (IGV) climbed 3.22 percent. Healthcare was strong as well with SPDR Healthcare (XLV) rising 1.54 percent. SPDR S&P Biotechnology (XBI) advanced 1.61 percent.

The December employment report showed 145,000 net new jobs, slightly below expectations, but well within the norm of the current expansion. The unemployment rate held steady at 3.5 percent. Wage growth was lower than forecasted at 0.1 percent. Retailers added 41,000 new workers, healthcare 28,000, construction 20,000 and mining 8,000 new jobs.

Earlier in the week, both the Markit and ISM services PMIs showed the non-manufacturing sector accelerating. Both climbed from November and beat consensus forecasts.

iShares High Yield Corporate Bond (HYG) rose 0.17 percent, Invesco Senior Loan (BKLN) 0.04 percent and iShares Investment Grade Corporate Bond (LQD) 0.03 percent.

SPDR Energy (XLE) pulled back 0.99 percent after tensions in the Middle East eased. The U.S. tightened sanctions, though de-escalated military tensions. Crude oil fell more than 6 percent on the week, to $59 per barrel.

iShares MSCI Emerging Markets (EEM) gained 1.47 percent this week and iShares MSCI EAFE (EFA) 0.26 percent. The U.S. Dollar Index advanced 0.56 percent on strong economic data and falling Mideast tension.

China and the U.S. are set to sign their phase-one trade agreement next week.

Earnings season kicks into high gear next week. This week saw solid results from Constellation Brands (STZ), KB Home (KBH), PriceSmart (PSMT), Lennar (LEN), RPM International (RPM) and Jeffries Financial Group (JEF), all of which beat estimates.

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