A quiet Monday for the Dow belied some risk off-moves in the index. Donald Trump’s meeting with Jerome Powell went off without a hitch. Nancy ...
The Dow Jones clung to record levels on Monday, as China’s retort to the coverage of its incarcerated Muslim population failed to roil risk appetite.
Helping support a mixed day for Dow stocks, President Trump’s meeting with the Federal Reserve’s Jerome Powell went smoothly, though his possible testimony in the impeachment hearings threatens to inject some volatility into the stock market.
It was a measured performance in the three major US stock market indices to start the week. The Nasdaq, Dow Jones Industrial Average, and S&P 500 all traded within a few points of last Friday’s record close.
At last check, the Dow had crawled 21.62 points or 0.08% higher to 28,026.51. The S&P 500 rose 0.01%, while the Nasdaq climbed 0.1% to just under 8,550.
Unrest in Hong Kong mixed with the trade deadlock between the US and China to help lift the gold price 0.2%, alongside the haven Japanese yen.
The British pound rose towards 1.30 as Conservative polling indicates some political stability could be possible in the United Kingdom. Ultimately, this could be good news for the Dow if Brexit reaches an acceptable resolution.
Monday also saw a surprisingly friendly Donald Trump tweeting about his “cordial” meeting with Federal Reserve Chair Jerome Powell.
Not in the mood to do any damage to the record-setting Dow Jones, the president was careful to make a rare bland statement.
In a more market-unsettling development, Trump may be prepared to accept House Speaker Nancy Pelosi’s offer to testify at the impeachment hearings.
Given how adverse White House advisers have been to him being grilled by anyone, this could be a terrifying prospect for traders.
Trump’s loose style would force markets to stand ready to react to any unscripted bombshells that might ensue, whether they pertain to the trade war or to the impeachment process itself.
Switching over to the macro fundamentals for the Dow Jones, it is clear that more and more analysts continue to see a resolute US retail sector starting to buckle.
In the view of Nordea Asset Management, the outlook for the US stock market is bright in the longer term. However, investors shouldn’t ignore the incredibly damaging effects of negative sentiment weighing on consumer appetite.
Nordea finds the current situation impossible to ignore in the near term, stating in a new report,
The Emerging Markets (EM) slowdown had an outsized impact on US manufacturing fed by stories of a US recession that have been propagated through investment banks and the media. The result is that the confidence of US conference board CEOs is close to an all-time low, with very negative consequences on the economy. This shock is starting to impact consumers, who are spending less than expected at a time when government spending and especially trade is not helping. We expect this contagion to spread and consumer savings to rise as this deleterious story takes hold though a US/China trade deal in Q1 2020 should help to reverse the situation.
It was a strange day in the Dow 30, as the index’s minuscule rally failed to represent what was going on under the hood.
Likely due to concerns over a breakdown in trade talks, there were some sizeable losses in China sensitive stocks like Caterpillar (-1.25%) and Boeing (-0.5%).
The sell-off in crude oil impacted Chevron and Exxon Mobil, as the energy giants came under pressure.
Disney led the Dow Jones with an impressive 2% rally. DIS resumed its uptrend that began amid the much-anticipated rollout of Disney+.
Apple stock was quiet, up a cautious 0.5%. Investors appear reluctant to take on too much AAPL risk until there is absolute clarification that the potentially damaging December tariffs will be avoided.