Market Perspective for January 7, 2019

Stocks extended their rally on Monday, led by the 1.78 percent increase in the small-cap Russell 2000. SPDR Consumer Discretionary (XLY) gained 2.27 percent, thanks to Amazon’s (AMZN) advance of 3.38 percent. Amazon became the largest stock by market capitalization. SPDR Energy (XLE) and SPDR Communication Services (XLC) climbed more than 1 percent on the day.

Financial market stocks fell due to a new stock market announcement. Morgan Stanley, Fidelity Investments, Citadel Securities, Bank of America Merrill Lynch, UBS, Charles Schwab, E-Trade and TD Ameritrade will co-own the new market and claim it will cut transaction costs for investors. Competitors were hit hard. CBOE Holdings (CBOE) fell 1.21 percent, IntercontinentalExchange (ICE) 3.03 percent and Nasdaq OMX Group (NDAQ) 2.61 percent.

Several Federal Reserve officials will make public speeches this week and the minutes of the December meeting will be made public on Wednesday. On Friday, Federal Reserve Chairman Powell said the Fed was listening to the markets and that policy was flexible. Stocks rallied in response. The first speaker this week, Atlanta Fed President Raphael Bostic, said he sees only one rate hike in 2019.

The National Federation of Independent Businesses will release its small business confidence index this week. The Job Openings and Labor Turnover Survey (JOLTS) for November is out on Tuesday. In October, there were a record 7.1 million job openings.

Friday brings consumer prices inflation for December. Analysts expect headline prices to decline 0.1 percent as crude oil and natural gas prices fell, but see core inflation stable at 0.2 percent.

The U.S. Dollar Index fell 0.40 percent on Monday, though the weaker dollar didn’t benefit broad international ETFs. SPDR S&P 500 (SPY) climbed 0.75 percent, iShares MSCI EAFE (EFA) 0.41 percent and iShares MSCI Emerging Markets (EEM) 0.24 percent.

Crude oil traded above $49 today before settling back at $48.67. Natural gas dipped to $2.94 per mmBTU.

Delta Air Lines (DAL) headlines a light week for earnings announcements. Analysts are looking for $1.28 per share and $5.57 for the full year. Constellation Brands (STZ), Lennar (LEN), KB Home (KBH), SUPERVALU (SVU) and Bed Bath & Beyond (BBBY) also report.

 

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