More Record Highs
U.S. stocks rose for the seventh time in eight weeks as investors took cues from a new batch of optimistic trade headlines. The S&P 500 Index gained 1% during the holiday-shortened week, notching three record high closes along the way. Stocks jumped on Monday after China announced it would tighten rules on intellectual property, a step forward in one of the United States’ primary talking points in trade discussions. Equities then pushed higher on several headlines indicating that both parties are close to signing a limited trade agreement, even though President Donald Trump signed into law a bill supporting Hong Kong protestors.
Economic data was mixed. Gross domestic product (GDP) grew 2.1% in the third quarter thanks to a 20 basis point (0.2%) upward revision in inventories, according to revised data. The Conference Board’s Consumer Confidence Index slid for a fourth straight month in November, but the gauge remained elevated historically. Orders for nondefense capital goods (excluding aircraft), a proxy for capital expenditures, jumped the most in nine months in October, according to preliminary data.
Global stocks were propped up by improving risk sentiment worldwide. The MSCI EAFE Index of developed-market stocks climbed almost 1% as the Stoxx 600 Index of European equities rose to a four-year high. The MSCI Emerging Markets Index rose 0.2%, hovering around a six-month high.
The Russell 2000 Index of small cap stocks led U.S. index returns, hitting a 14-month high as participation in the stock market rally broadened. The growth style of investing outperformed value, and consumer discretionary stocks were the best sector performers.
Fixed Income, Currencies, and Commodities
U.S. fixed income gained for a third straight week as investors sought “safe haven” assets. The 10-year U.S. Treasury yield dropped slightly to 1.77%. The Bloomberg Barclays U.S. Aggregate Index increased 0.2%, led by gains in investment-grade corporate debt and Treasury Inflation-Protected Securities (TIPS).
The U.S. dollar dropped slightly and Oil prices also declined after a three-week gain. Copper prices increased in a positive signal for global economic health. Gold prices climbed
Next week the calendar will turn, and investors will receive several clues about the U.S. economy’s performance in November. Markit and Institute for Supply Management Purchasing Managers’ Index data for the manufacturing and services sectors will be released on Monday and Wednesday. The November jobs report is slated to come out Friday. Internationally, investors will be watching for revised Eurozone and Japan GDP data, which will come out on Tuesday and Thursday, respectively.
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