Conflicting signals. U.S. stocks are little changed this morning as conflicting trade headlines pour in. The S&P 500 Index declined on November 20, notching its first string of consecutive declines since October 8, after reports suggested the United States and China may not finalize a limited trade agreement by the end of the year. Then, China Vice Premier Liu He said he’s “cautiously optimistic” about striking a phase one deal with the United States. We’re in a quiet period for earnings and economic news, so stocks at record highs may be especially sensitive to headlines.
Increasing pessimism. Investors are growing increasingly pessimistic about a near-term trade agreement, based on signals from financial markets. Stocks with close ties to China have been strong performers in recent months, but we’ve observed some weakness in these equities, consistent with headlines that suggest that prospects for a deal by year-end may be waning. Copper prices are also poised for their second straight week of losses, which would be the first time that’s happened since early August. We still think a deal will come soon, but early 2020 looks increasingly likely.
Economic outlook edges out risks. An upbeat economic outlook may be edging out elevated downside risks in the Federal Reserve’s (Fed) decision-making, according to the minutes from the Fed’s October meeting. Both dynamics were discussed at length, but participants ended up removing the “act as appropriate” language in the post-meeting statement, a sign to us that this round of rate cuts has ended. We’ll dive into the October meeting minutes more today on the LPL Research blog.
NEW Street View video. In the newest Street View video, Sr. Market Strategist Ryan Detrick illustrates aspects to be thankful for in each of the three pillars of investing: fundamentals, valuations, and technicals. At less than 2 minutes in length, There’s A Lot To Be Thankful For is easy to share with clients and add to your digital media. Look for more videos on the Resource Center.
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