Market Perspective for January 11, 2019

The stock market extended its rally this week. The Russell 2000 Index led the major indexes with a gain of 4.83 percent.

Industrials were the best performing S&P 500 sector. SPDR Industrial (XLI) climbed 4.71 percent. Union Pacific (UNP), General Electric (GE) and Boeing (BA) rose 11.21 percent, 8.63 percent and 7.89 percent, respectively.

SPDR S&P 500 (SPY) rose 2.54 percent, iShares MSCI Emerging Markets (EEM) 2.61 percent and iShares MSCI EAFE (EFA) 1.89 percent.

Crude oil climbed back above $50 this week and natural gas rebounded above $3 per mmBTU. SPDR Energy (XLE) rallied 3.57 percent on the week. First Trust ISE Revere Natural Gas (FCG) advanced 6.47 percent.

The Job Openings and Labor Turnover Survey showed 6.9 million openings in November, down from 7.1 million in October, but still more than the number of unemployed Americans. Initial claims for unemployment fell back towards multi-decade lows at 216,000. Economists forecast 227,000.

Headline consumer price inflation decreased 0.1 percent in December, due to falling energy prices. Headlines inflation dipped below 2 percent for the first time since 2016 as well. Core inflation held steady at 0.2 percent.

China’s producer price index fell 1.0 percent in December and the 12-month PPI fell to 0.9 percent. Both data points signal the domestic Chinese economy is still slowing.

General Motors (GM) gained 7.03 percent on Friday after it pre-announced 2018 earnings would be stronger than expected and lifted its 2019 guidance. CEO Mary Barra said the automaker will deliver earnings between $5.80 and $6.20 per share for 2018 and between $6.50 and $7.00 in 2019. Prior to the announcement, the consensus earnings forecast for 2019 was $5.92 per share.

Lennar (LEN) and KB Home (KBH) both beat earnings estimates. KB Home gained 2.32 percent on the week and Lennar 12.62 percent.

 

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