The large-cap indexes and the technology-heavy Nasdaq Composite Index outperformed the smaller-cap benchmarks, a higher-valuation growth
shares outpaced slower-growing value stocks for the first time in a month.
Health care and information technology shares outpaced the rest of the S&P 500 Index, while materials shares performed worst.
The large financials sector struggled as longer-term interest rates fell, threatening bank lending margins.
Energy shares also lagged as domestic oil prices fell below $50 per barrel for the first time in over a year.
The week started out on a strong note, helped by favorable news from the European Union’s meeting over the weekend.
Various international traders noted that investors were also encouraged by positive sales data over the Black Friday weekend.
Internet sales from Wednesday through Black Friday surged by 26.4% over the same period in 2017, according to data tracked by Adobe Systems.
As has often been the case in recent months, trade headlines threatened briefly to offset the market’s advance, stocks opened lower on Tuesday
morning after The Wall Street Journal published a report the previous evening that President Donald Trump planned to follow through on his threat
to increase the tariff rate on many Chinese goods from 10% to 25% at the beginning of 2019.
Stocks regained momentum, however, after White House Chief Economic Advisor Larry Kudlow told reporters that the upcoming meeting between
Trump and Chinese President Xi Jinping offered “an opportunity to break through what have been disappointing discussions.”
Positive comments from a senior Chinese economic official as the Group of 20 (G-20) summit convened on Friday may have provided a further
boost to sentiment to end the week.
The week’s primary positive catalyst seemed to come on the monetary policy front, stocks rallied sharply on Wednesday following a speech by
Federal Reserve Chairman Jerome Powell in which he stated that the federal funds rate is “just below” a neutral level that would neither stimulate
the economy nor rein in growth to curb inflation.
The week’s economic data were mixed, Commerce Department reported that new home sales dropped by nearly 9% in October to their lowest level
in two and one-half years.
Pending home sales also recorded a surprising drop and home prices rose less than expected in September, furthermore Weekly jobless claims
recorded their fourth consecutive increase and another regional manufacturing index came in below expectations.
On the positive side, both personal spending and income rose at a solid pace in October and surpassed consensus estimates.
The economic data and Powell’s comments pushed the yield on the benchmark 10-year Treasury note to dip below the 3.0% threshold for the first
time since mid-September.
Trade worries seemed to weigh on high yield bond performance early in the week, but the market retraced its losses after Powell’s comments,
additionally the decline in crude oil prices also weighed on many high yield bond issuers in the energy sector.
Source: G&T
