US Equity Markets rallied to new all-time highs last week, as positive US economic data, healthy US earnings reports, and a supportive Federal Reserve that lowered interest rates boosted investor enthusiasm. The S&P 500 rose 1.5% for the week and is now up 22.3% for the year. The Nasdaq increased 1.7% for the week to bring its gains for the year to 26.4%, while the Russell 2000 (small-cap stocks) surged 2.0% for the week and is now up 17.9% for the year.
Global equity markets advanced last week based on the US economic news and the extension of the Brexit deadline to the end of January 2020. Developed Markets increased 1.1% for the week and is now up 14.8% for the year. Emerging Markets rose 1.3% for the week to bring its gains for the year to 8.7%.
US Interest Rates declined last week as the Fed lowered rates and suggested it would take a lot to move rates higher. As expected, the Fed reduced rates by another 0.25% at its Fed meeting last week, and Fed Chairman Powell indicated that it would take a lot for the Fed to move rates either higher or lower from here. The yield on the 10-Year US Treasury dipped to 1.71% last week from 1.79% the prior week. Wall Street is currently placing only about a 20% chance that the Fed will cut rates at its next meeting.
Of Interest to Us
US Economic Data last week suggested a stronger economy than many investors feared. Specifically, Payroll gains for October of 128K were much better than forecasts, and prior months gains were revised significantly higher. The Unemployment Rate remains near decade-lows at 3.6%. The initial estimate for US economic growth for the third quarter came in at 1.9%, also nicely higher than expected, while Inflation remains in check. The ongoing issues are largely focused on US manufacturing, where data last week indicate that manufacturing is contracting, though that was expected by the Street.
for the week ending 11/1/2019
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