Stocks higher. Stocks are higher this morning, adding to gains after the S&P 500 Index capped its ninth weekly increase in 10 weeks. The U.S-China limited trade agreement has boosted risk sentiment around the world, and the tariff hike scheduled for December 15 has officially been delayed. Beyond that, there aren’t many apparent catalysts for the stock market in either direction other than seasonality. The second half of December has been a seasonally strong period for U.S. stocks. Since 1950, the S&P 500 has rallied an average of 0.4% weekly in the last three calendar weeks of the year.
Global manufacturing stumbles along. The global economy isn’t out of the woods yet, according to preliminary Markit manufacturing Purchasing Managers’ Index (PMI) data for December. Germany’s manufacturing PMI climbed to a five-month high of 44.1, but the gauge remains well in contractionary territory. The Eurozone manufacturing PMI slid to 45.9, around the lowest level since 2013. We’ve seen some signs of bottoming in global economic data as trade tensions have eased recently, but it may take a while for conditions to recover. That’s especially true for the Eurozone, which may struggle to reach 1% growth in 2020 amid ineffective monetary policy and structural challenges.
Better days ahead for bonds. 2019 was a baffling year for bonds, but we’ve seen some improvement in long-term yields. We still believe bonds have a role to play in helping to diversify portfolios. Find out more in the new Weekly Market Commentary: Better Days Ahead for Bonds.
Stocks rise. Stocks rallied late in the week last week, while the 10-year U.S. Treasury yield climbed to a one-month high. The U.S. dollar fell, and WTI crude oil neared $60 per barrel. For a review of all major index performance see Weekly Market Performance: Stocks Rise as Uncertainty Clears.
The week ahead. This week, the U.S. economic calendar will deliver preliminary December Markit PMI data on Monday and industrial production on Tuesday. The November update for the Leading Economic Index (LEI) will be released Thursday. Revised Q3 2019 gross domestic product and consumer confidence will come out Friday. Internationally, investors will evaluate a Eurozone inflation report on Wednesday and the Bank of Japan’s policy decision Thursday.
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