Market Perspective for January 24, 2020

Despite strong earnings, the Nasdaq decreased 0.66 percent on the week. The S&P 500 Index declined 0.76 percent and the Dow Jones Industrial Average 1.05 percent. The dip this week lowered the Nasdaq’s return this year to 3.83 percent. The S&P 500 Index has increased 2.01 percent and the Dow 1.60 percent.

Intel (INTC) beat earnings estimates and shares climbed 12.49 percent for the week. The beat helped power the VanEck Semiconductor ETF (SMH) to a gain of 1.01 percent. It also aided SPDR Technology (XLK), which increased 0.21 percent for the week. The best performing sector was utilities thanks to falling interest rates. SPDR Utilities (XLU) advanced 2.56 percent.

Other firms beating earnings this week included International Business Machines (IBM), Proctor & Gamble (PG), Johnson & Johnson (JNJ), American Express (AXP), Netflix (NFLX) and Comcast (CMCSA).

Economic data was light this week. The main data point was flash PMIs on Friday, which were strong. The U.S. composite PMI for January was higher, indicating a strong uptick in service activity. Both Europe and Japan’s manufacturing PMIs also turned higher.

The U.S. Dollar Index increased 0.4 percent this week. iShares MSCI Emerging Markets (EEM) fell 1.40 percent as Chinese stocks declined. iShares China Large-Cap (FXI) declined 2.11 percent. Xtrackers Harvest CSI 300 China A-Shares (ASHR) slid 3.41 percent.

The 10-year Treasury yield slid to a three-month low of 1.68 percent. Corporate and investment grade bonds benefited the most from falling yields. Fidelity Corporate Bond (FCOR) gained 0.68 percent.

Falling yields were also positive for housing shares, which also benefited from strong earnings reports. iShares U.S. Home Construction (ITB) climbed 2.04 percent on the week. ITB recently exceeded its housing bubble high.

 

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