The large caps of the Dow and S&P 500 surged last week. The Dow reached 28000 for the first time in its history while the S&P 500 posted solid gains for the sixth consecutive week. Investors continued to be bullish on hopes that a trade deal between the United States and China is on the horizon. The tech stocks of the Nasdaq also climbed last week while the small-cap Russell 2000 and the Global Dow dropped back. Year-to-date, each of the benchmark indexes are well ahead of their 2018 closing values, led by the Nasdaq, which is nearly 30% ahead of last year’s ending mark.
LAST WEEK’S ECONOMIC HEADLINES
- Inflation, as measured by the Consumer Price Index, rose 0.4% in October. Over the last 12 months, the CPI has risen 1.8%. Over the same period, core prices are up 2.3%.
- Retail sales rose 0.3% in October and are up 3.1% since October 2018.
- Producer prices rose 0.4% in October after falling 0.3% in September. Prices are up 1.1% for the 12 months ended in October, the smallest increase since a comparable rise in the 12-month period ended October 2016.
- Both import and export prices fell in October, further evidencing waning global inflation. For the year, import prices are down 3.0% and export prices are off 2.2%.
- Manufacturing continues to lag in 2019. The Federal Reserve’s industrial production index fell 0.8% in October after dropping 0.3% in September. Overall, total industrial production was 1.1% lower in October than it was a year earlier.
- The first month of the new fiscal year for the federal government saw October start off with a deficit of $134.5 billion, 34% higher than the $100.5 billion deficit the prior October.
EYE ON THE WEEK AHEAD
This week the focus is on the continuing trade negotiations between the United States and China — clearly a market mover. Also, economic reports center on the housing sector, with October housing starts figures as well as the latest on existing home sales.