Market Perspective for January 18, 2020

The Nasdaq gained 2.27 percent this week, the S&P 500 Index 1.95 percent and the Dow Jones Industrial Average 1.80 percent. Technology pulled the major indexes higher. SPDR Technology (XLK) increased 2.94 percent.

Networking stocks have been strong of late, with iShares Expanded Networking (IGN) returning 3.17 percent.

Defensive shares also performed well on the week. SPDR Utilities (XLU) rose 3.73 percent. Materials and communications services were also strong. SPDR Materials (XLB) and SPDR Communication Services (XLC) rallied 2.65 percent and 2.70 percent, respectively. iShares Edge MSCI Minimum Volatility USA (USMV) climbed 2.45 percent as investors began increasing their volatility protection. Vanguard Dividend Appreciation (VIG) increased 2.45 percent.

The National Federation of Independent Business’ small business confidence index registered a 102.7 reading in December. This was the third year with readings consistently above 100. Prior to 2017, the index hadn’t been over 100 since 2006.

Weekly unemployment fell to 204,000, after hovering near 220,000 level for several weeks. The Empire State index showed an uptick in manufacturing within the Federal Reserve Bank of New York’s geographic region. A similar measure from the Philly Fed showed an even large increase for their region.

Housing stats hit a 13-year high in December, at an annualized pace of 1.608 million. This blew away forecasts of 1.375 million.

Retail sales were stronger than expected last month. Sales increased 0.3 percent and 0.7 percent ex-autos.

The U.S. and China signed the phase-one trade deal this week. The agreement will see an increase in trade between the two countries if both sides follow through. iShares China Large Cap (FXI) increased 1.28 percent.

Crude oil slumped due to fading geopolitical risk and rising inventories. Crude ended the week at $58.70 per barrel.

Shares of J.P. Morgan (JPM) and Citigroup (C) rallied following their earnings beats, while Wells Fargo (WFC) slipped after missing estimates. Morgan Stanley (MS) rose 10.13 percent after the firm beat forecasts. iShares U.S. Financial Services (IYG) gained 1.71 percent on the week.

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