A variety of resources at your service

CCCM WEEKLY MARKET REVIEW

November 11, 2019

U.S. Markets: The Dow Jones Industrial Average joined the S&P 500 and NASDAQ Composite indexes in all-time high record territory, as optimism grew about a “phase one” trade deal between the U.S. and China. The Dow added 333 points to close at 27,681, a gain of 1.2%. The technology-heavy NASDAQ Composite added 1.1%, ending at 8,475. By market cap, the large cap S&P 500 rose 0.9%, while the S&P 400 mid cap index and Russell 2000 small cap indexes rose 0.8% and 0.6%, respectively.

U.S. Economic News: U.S. jobless claims fell to a one-month low last week as the labor market remained strong, and the number of Americans seeking first-time unemployment benefits fell by 8,000 to 211,000. Economists had forecast new claims would total a seasonally-adjusted 215,000. Jobless claims fell the most in California, Georgia and Virginia. Claims had previously risen in California as wildfires and power outages kept many people from work. The monthly average of new claims, smoothed to iron out the weekly volatility, ticked up by 250 to 215,250. Continuing claims, which counts the number of people already collecting unemployment benefits, fell by 3,000 to 1.69 million. Those claims are near their lowest level since the early 1970’s.

The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) showed the number of job openings fell in September for a fourth consecutive month to 7.02 million. The reading is down from 7.3 million, the Bureau of Labor Statistics reported. Companies have cut back on hiring as the U.S. economy continues to grow more slowly. The “quits rate” component of JOLTS for the private sector ticked down from 2.7% to 2.6%. The quits rate is rumored to be one of the Federal Reserve’s key indicators of the health of the labor market as it’s presumed an employee would only leave a position for a more lucrative one. For all workers, including government employees, the reading fell to 2.3% from 2.4%.

The services side of the U.S. economy rebounded last month after hitting a three-year low, the Institute for Supply Management (ISM) reported. ISM stated its non-manufacturing index rose 2.1 points to 54.7 in October. Economists had expected the index to rise to lesser 53.8. Numbers over 50 indicate businesses are growing. Analysts believe the improvement was predominantly due to the recent thawing in trade tensions between the U.S. and China. Service-oriented companies haven’t been hurt as much by the trade dispute as manufacturing companies, but the spillover effects have resulted in slower growth. The services index is down 6 points from its post-recession peak set last year.

For the first time in almost five years, the productivity of American workers declined. The Labor Department reported that productivity declined at a 0.3% annual rate in the third quarter, reflecting a cutback in production as the economy slowed at the end of summer. Economists had predicted a 0.6% increase in productivity. The decline in productivity might be just temporary if the economy speeds up again, but it could also be a warning sign. Businesses reduced production in response to softer demand, especially for exports. The trade conflict between the U.S. and China has disrupted global supply chains and contributed to a world-wide slowdown in economic growth.

For a second consecutive month, consumers pulled back on their use of credit cards. U.S. consumer borrowing grew at its slowest rate in 15 months in September, according to Federal Reserve data. Total consumer credit increased $9.5 billion, down from a $17.8 billion increase in August. Economists had been expecting a gain of $15 billion. The September gain was well below the monthly average growth for the first eight months of the year of around $16 billion. It translates into an annual growth rate of 2.8%--the slowest since June 2018. T.J. Connelly, head of research at Contingent Macro Research stated, “The credit card spending trend appears to show that while consumers remain willing and able to spend, they are doing so only cautiously and are still reluctant to take on substantial debt.”

Sentiment among the nation’s consumers improved slightly this month, according to the University of Michigan. UofM’s consumer sentiment survey rose slightly to 95.7 this month, up 0.2 point from October. Economists had expected a reading of 95. In the details, consumers’ views on current conditions fell 2.3 points to 110.9, while their expectations of future conditions rose 1.7 points to 85.9. Economists follow readings on sentiment to get an insight into their spending, the backbone of the U.S. economy. Richard Curtin, chief economist of the survey stated, “Although consumers have become somewhat more cautious spenders, they see no reason to engage in the type of retrenchment that causes recessions.”

Finally: Since its initial Open Door Policy in 1978, China’ economy has experienced rapid growth to become the world’s second largest economy in GDP terms. In the coming year, China is expected to move into the next phase of opening up its economy by lifting its many restrictions on the foreign ownership of stocks, bonds and other securities. This will make its economy more accessible than ever before, and make investing in China much easier than it is now. As this chart from Alliance Bernstein shows, the Chinese equity market is huge and rapidly expanding, and future diversified global investors will find that including Chinese investments in their portfolios is an option to seriously consider.

(Sources: all index return data from Yahoo Finance; Reuters, Barron’s, Wall St Journal, Bloomberg.com, ft.com, guggenheimpartners.com, zerohedge.com, ritholtz.com, markit.com, financialpost.com, Eurostat, Statistics Canada, Yahoo! Finance, stocksandnews.com, marketwatch.com, wantchinatimes.com, BBC, 361capital.com, pensionpartners.com, cnbc.com, FactSet; Figs 1-5 source W E Sherman & Co, LLC)

There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. This material is being provided for information purposes only. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.

The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stock of companies maintained and reviewed by the editors of the Wall Street Journal.

The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.

The S&P MidCap 400® provides investors with a benchmark for mid-sized companies. The index, which is distinct from the large-cap S&P 500®, measures the performance of mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment.

The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system.

One cannot invest directly in an index. Past Performance does not guarantee future results.


November 4, 2019

U.S. Markets: A Friday rally lifted stocks solidly higher for a fourth consecutive week. The large cap S&P 500 index and the technology-heavy NASDAQ Composite reached new intraday and closing highs, while the smaller cap benchmarks remained below their summer highs. The Dow Jones Industrial Average gained 389 points, or 1.4%, to finish the week at 27,347. The NASDAQ added 1.7% and closed at 8,386. By market cap, the large cap S&P 500 rose 1.5%, the S&P 400 midcap index added 1.2%, and the small cap Russell 2000 gained of 2.0%.

October Summary: All U.S. market indices gained in October. The Dow Jones Industrials rose 0.5%, the NASDAQ surged 3.7% and the S&P 500 gained 2.0%. The mid cap S&P 400 and small cap Russell 2000 gained 1.0% and 2.6%, respectively. International markets were mixed, but mostly positive.   Canada and the United Kingdom gave up -1.1% and -2.2%, respectively, while France and Germany added 0.9% and 3.5%. China added 0.8% while Japan surged 5.4%. Developed markets as a group gained 3.4% and emerging markets as a group added 4.2%. Metal and energy commodities were positive for the month. Gold gained 2.8% and Silver added 6.3% in October, while oil ended the month remarkably flat, rising just 0.2%, and copper finished the month up 2.3%.

U.S. Economic News: The number of Americans seeking first-time unemployment benefits rose slightly last week, but layoffs remained near their lowest levels in half a century. The Labor Department reported initial jobless claims rose by 5,000 to 218,000 last week. Economists had estimated new claims would total a seasonally-adjusted 215,000. The biggest increase in new claims appeared to be in California, where wildfires and power outages kept many people from working. The more stable monthly average of new claims fell by 500, to 214,750. Continuing claims, which counts the number of people already receiving benefits, rose by 7,000 to 1.69 million.

The Non-Farm Payrolls (NFP) report surprised most pundits by reporting that the U.S. economy created 128,000 new jobs in October. Hiring was also stronger at the end of summer than previously reported, the Bureau of Labor Statistics stated. The NFP number easily topped the consensus forecast of 75,000 new jobs. Jobs in leisure and hospitality gained the most, followed by education and health services. The number of jobs in manufacturing contracted the most, most likely caused by the strike at General Motors. The unemployment rate ticked up to 3.6% from 3.5%, but still remains near its lowest level since 1969 and several demographic sub-groups hit their all-time lowest unemployment rate.

The number of home sales in which a contract has been signed, but not yet closed, rose for a second straight month in September, reported the National Association of Realtors (NAR). The NAR stated its pending home sales index climbed 1.5%, helped by lower mortgage rates. Economists had expected just a 0.7% gain. Compared to the same time last year, sales were up by 3.9%. Economists use this number to give an early indication of actual home sales. By region, pending home sales in the Midwest and South showed gains, while the Northeast and West reported declines. Lawrence Yun, Chief Economist for the NAR stated that while the Federal Reserve’s two interest rate cuts this year are helping the housing sector, contract signings would be even higher if more housing was available.

The rate of increase in home prices across the country continued to slow in late summer, according to the latest report from S&P/Case-Shiller. Their 20-city home price index fell 0.2% in August after seasonal adjustments. It was the first decline since last August. Over the past year, the index posted a 2% gain. That number is far below the readings in the 5-6% range prevalent at this time last year. In the details, 17 of the 20 large cities tracked by Case-Shiller posted an increase in home prices, with Phoenix now leading the nation in annual home price gains, up 6.3%. Blerina Uruci, economist at Barclays wrote, “We have seen some stabilization in the Case Shiller index as well as a range of housing activity indicators including home sales and housing starts. As a result, the broader picture suggests that the sector seems on track to stabilize by year-end.”

The confidence of American consumers stabilized in October as trade tensions between the U.S. and China eased and stocks surged. The Conference Board reported its Consumer Confidence Index edged down slightly to 125.9 in October from a revised 126.3 in September. Economists had forecast a reading of 128.0. The index of consumer confidence hit an 18-year high exactly one year ago at 137.9. It’s been up and down since then as the U.S. and China appeared closer to a trade deal and then down when talks fell through. In the report, Americans feel pretty good about the economy right now, but they’re not quite as confident about the future. The so-called present situation index rose to 172.3 from 170.6, but the index that looks at expectations six months from now declined to 94.9 from 96.8. Nonetheless, overall the report was taken as positive. Lynn Franco, director of economic indicators at the privately run Conference Board stated, “Confidence levels remain high and there are no indications that consumers will curtail their holiday spending.”

The Federal Reserve cut interest rates for a third meeting in a row, but Chairman Jerome Powell said in a post-meeting press conference that it would take “material” change in outlook to justify a further rate cut. At its policy meeting this week, Fed officials said they would lower the federal-funds target rate by a quarter percentage point, to between 1.5% and 1.75%. Justifying the move, the Fed cited “the implications of global developments for the economic outlook as well as muted inflation pressures.” In essence, these rate cuts are insurance against a recession. Fed Chairman Jerome Powell said policy would remain steady as long as “incoming information about the economy was broadly consistent” with the Fed’s forecast of moderate economy growth, a strong labor market and inflation near the 2% target. “We believe monetary policy is in a good place to achieve these outcomes,” Powell said. “We see the current stance of policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook.”

Finally: If a 70-year tendency holds true this year, the balances of Americans’ 401k’s and other investment accounts should be fatter around the New Year. The Dow Jones Data Group analyzed market returns going back to 1950 and found that when the Dow Jones Industrial Average and the S&P 500 index are up a sizable amount at the end of October, as indeed they were this year, positive returns for the rest of the year are in the cards. The authors characterized the gains as “remarkably stellar”. Specifically, when the Dow is up by at least 15% in the year to date through the end of October, the index has been 15-0 for November and December, tacking on an average additional return of 5.55%. The worst gain was +0.97%, the best +14.84%, with most being in the +4% to +6% range. Since the Dow was up 15.9% and the S&P 500 was up 21.2% at the end of this October, the year 2019 is qualified for admission to the party. Of course nothing is guaranteed, but the odds sure are attractive!

(Sources: all index return data from Yahoo Finance; Reuters, Barron’s, Wall St Journal, Bloomberg.com, ft.com, guggenheimpartners.com, zerohedge.com, ritholtz.com, markit.com, financialpost.com, Eurostat, Statistics Canada, Yahoo! Finance, stocksandnews.com, marketwatch.com, wantchinatimes.com, BBC, 361capital.com, pensionpartners.com, cnbc.com, FactSet; Figs 1-5 source W E Sherman & Co, LLC)

Any opinions are those of Chapman and Cardwell Capital Management and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Charts and tables presented herein are for illustrative purposes only and should not be considered as the sole basis for your investment decision. Past performance does not guarantee future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns.

The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.

The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represent approximately 8% of the total market capitalization of the Russell 3000 Index.

The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stock of companies maintained and reviewed by the editors of the Wall Street Journal.

The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system.

The S&P MidCap 400® provides investors with a benchmark for mid-sized companies. Stocks of smaller or newer or mid-sized companies may be more likely to realize more substantial growth as well as suffer more significant losses than larger or more established issuers.

Investing in oil involves special risks, including the potential adverse effects of state and federal regulation and may not be suitable for all investors.



In the ever-changing landscape of finance we must ensure our clients are properly invested based upon their investment goals and objectives.

Peter Chapman




Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.

Securities offered through Raymond James Financial Services, Inc. Member FINRA / SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Chapman & Cardwell Capital Management is not a registered broker/dealer, nor is it affiliated with Raymond James Financial Services.

Raymond James financial advisors may only conduct business with residents of the states and/or jurisdictions for which they are properly registered. Therefore, a response to a request for information may be delayed. Please note that not all of the investments and services mentioned are available in every state. Investors outside of the United States are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this site. Contact your local Raymond James office for information and availability. Links are being provided for informational purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. | Privacy Policy

© Chapman & Cardwell Capital Management. All Rights Reserved.