- Stocks move to new records once again as the Dow trades near 29,200
- Initial Jobless Claims were only 204,000 vs. the 218,000 estimate
- Retail sales rose 0.3% in December, matching estimates. Ex-Autos, sales rose 0.7% vs the 0.5% estimate. November retail sales were revised higher by 0.1% to 0.3%.
Stocks climbed once again to record highs, with the Dow gaining in eight of eleven sessions to start the year. Investors seem to be counting on an improving global economy helped by a reduction in trade tensions. The US consumer seems to be in good shape and the upward price momentum is keeping the bears at bay. The focus on US earnings will be more intense given the high valuations already priced into stocks.
In earnings news, Morgan Stanley and Taiwan Semiconductor reported earnings this morning and moved higher. Bank of New York beat on estimates but is trading lower on concerns about lower interest rates. Alcoa reported earnings last night and is trading in the red this morning. AA used to be the first company to report earnings – and was seen as an industrial bellwether – before a divestiture in 2016 changed that company’s profile.
The Dow closed above 29,000 for the first time yesterday after first touching that level on an intraday basis last week. It took only 40 trading days since the last 1,000 point milestone and, according to the WSJ this was the shortest timeframe except for the eight day gap between Dow 25,000 and Dow 26,000. In the year 2000, someone wrote a book called Dow 36,000 – and then penned a WSJ editorial in 2011 about why he was wrong about that. But with the Dow within 1,000 points of 30,000, this could be something I actually see in my lifetime. It also seems like just yesterday we were celebrating the Nasdaq Composite Index crossing 5,000. The S&P 500, which closed above 3,000 for the first time only in July, is now above 3,300. Put differently, the 3330 level is a fivefold increase off the financial crisis low of 666.
We could easily look back on this time as the “peak” and wished we sold stocks (into what is another question since everything else seems expensive). The market momentum is powerful however and the old maxims “the trend is your friend” and “don’t fight the Fed” come to mind. As the WSJ noted today, the S&P 500 has not moved 1% or more in either direction since mid-October, its sixth-longest streak since the end of 1969 and third-longest since the end of 1995. We all know that periods of low volatility often end with sharp moves in stocks – in fact this happened twice in 2018 – but let’s enjoy this while we can.
The economic news today was positive, helping the rally. Retail sales rose 0.3% in December, in line with estimates with November’s growth also revised upward to 0.3%. The numbers show that consumers continued to spend, Target’s recent results notwithstanding. Sales grew across most categories, though autos were a weak spot. Ex Autos, retail sales grew at a better than expected 0.7% gain, the best since July. Bolstering the consumer is the fact that initial jobless claims were only 204,000, about 14,000 lower than expected and the 4th lowest weekly reading in five years. Claims have only fallen below 200,000 in during two consecutive weeks in April 2019 and November 2019 saw a 203,000 print. Continuing claims fell to 1.767 million vs. consensus of 1.750 million. And lest you say the consumer is the only bright spot given the weaker manufacturing readings in the U.S. and Germany, we did see both the Empire Manufacturing (yesterday) and the Philly Fed Index today (17.0 actual vs. 3.8 estimated) start to show some positive signals in regional economies. Yes there are warning signs but today stocks don’t care.
All 11 sectors are positive today, something you don’t always see on up days as stocks sometimes toggle from “risk on to risk off.” Technology and Consumer Discretionary are leading the pack, which also suggests investors see economic growth ahead. Utilities and Staples are lagging.
Brian’s Technical Take
Yesterday, the small cap Russell 2000 (RTY) joined its large cap brethren by breaking out to new 52-week highs for the first time in 2019. The RTY is up four straight days this week, is leading all major U.S. equity indices with a week-to-date gain of 2.6%, and is now within 2.5% of its all-time highs made back in September 2018. From our 11/19 MIDDAY Update “Now could be the time for small caps,” the RTY has gained 6.7% and outperformed the S&P 500, Dow Industrials, and S&P Midcap 400 indices.
Nasdaq’s Market Intelligence Desk (MID) Team includes:
Charles Brown is Associate Vice President on The Market Intelligence Desk with over 20 years of equity capital markets experience. Charlie has extensive knowledge of equity trading on both floor and screen-based marketplaces. Charlie assists with the management of The Market Intelligence Desk and works with Nasdaq listed companies providing them with insightful objective trading analysis.
Steven Brown is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over twenty years of experience in equities. With a focus on client retention he currently covers the Financial, Energy and Media sectors.
Christopher Dearborn is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq. Chris has over two decades of equity market experience including floor and screen-based trading, corporate access, IPOs and asset allocation. Chris is responsible for providing timely, accurate and objective market and trading-related information to Nasdaq-listed companies.
Brian Joyce, CMT is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq. Before joining Nasdaq, Brian spent 16 years as an institutional trader executing equity and options orders for both the buy side and sell side. He also provided trading ideas and wrote technical analysis commentary for an institutional research offering. Brian focuses on helping Nasdaq’s Financial, Healthcare and Transportation companies, among others, understand the trading in their stock. Brian is a Chartered Market Technician (CMT).
Michael Sokoll, CFA is Associate Vice President on the Market Intelligence Desk (MID) at Nasdaq with over 25 years of equity market experience. In this role, he manages a team of professionals responsible for providing NASDAQ-listed companies with real-time trading analysis and objective market information.