In this week's recap: stock and commodity traders turn cautious as the coronavirus reaches America; home sales increase even with the current housing market's slim inventory.
Weekly Economic Update
Presented by Paul Moffat, MBA, AIF®, January 27, 2020
THE WEEK ON WALL STREET
Stock prices fell last week as investors considered the potential health and economic risks of the flu-like coronavirus.
Foreign stock markets, as tracked by the broad MSCI EAFE index, fell 1.03% for the week. Coincidentally, the S&P 500 lost exactly that much across a 4-day Wall Street trading week. The Dow Jones Industrial Average declined 1.22%, the Nasdaq Composite 0.79%.1,2
FUTURES MARKETS EYE CORONAVIRUS OUTBREAK
By Friday's closing bell, two cases of coronavirus had been confirmed in the U.S. by the Centers for Disease Control and Prevention. Sixty-three other potential cases were being monitored. Twenty-six people had died from the virus in China, where more than 30 million people faced travel restrictions.
This news exerted a drag on stocks in multiple industries. Oil prices also slipped: West Texas Intermediate crude lost 7.4% for the week to settle at $54.19 Friday. Stock and commodity traders wondered if the virus would mimic the SARS scare of 2002-03, which kept Chinese workers and shoppers at home and hurt corporate earnings worldwide.3,4
FEWEST HOMES FOR SALE IN 20 YEARS
Existing home sales improved 3.6% in December, according to the National Association of Realtors. This happened even as the number of listed properties hit a 20-year low. The NAR says that the rate of total U.S. home sales (existing and new) increased 10.8% in 2019.5
Traders will watch not only earnings and economic indicators this week, but also the Federal Reserve, which meets Tuesday and Wednesday. Will the central bank's latest monetary policy statement reveal any subtle change of outlook?
T I P O F T H E W E E K
If you make your retirement money hard to reach, you may be doing yourself a favor. Tax-advantaged retirement accounts have rules that help to discourage early withdrawals. Those rules are designed with your future self in mind, and they exist to make you think twice about tapping such accounts for current needs.
THE WEEK AHEAD: KEY ECONOMIC DATA
Monday: The Census Bureau's report on December new home sales.
Tuesday: The latest consumer confidence index from the Conference Board.
Wednesday: A monetary policy announcement from the Federal Reserve, followed by a press conference with Fed chair Jerome Powell.
Thursday: The first estimate of fourth-quarter gross domestic product from the Bureau of Economic Analysis.
Friday: December consumer spending figures from the Department of Commerce, plus the final January University of Michigan consumer sentiment index (a gauge of consumer confidence levels).
Source: MarketWatch, January 24, 2020
The MarketWatch economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
THE WEEK AHEAD: COMPANIES REPORTING EARNINGS
Monday: D.R. Horton (DHI), Sprint (S)
Tuesday: Apple (AAPL), Pfizer (PFE), SAP (SAP), United Technologies (UTX)
Wednesday: AT&T (T), Facebook (FB), Mastercard (MA), Microsoft (MSFT)
Thursday: Amazon (AMZN), Coca-Cola (KO), Verizon (VZ), Visa (V)
Friday: Chevron (CVX), ExxonMobil (XOM), Honeywell International (HON)
Source: Zacks.com, January 24, 2020
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
Q U O T E O F T H E W E E K
"It's not the things we do in life that we regret on our death bed, it is the things we do not."
T H E W E E K L Y R I D D L E
I'm a word some use to measure bits of time, but you won't find me on a clock or anything that chimes. I will never fit upon a clock face, but I am used to identify a place. What word am I?
LAST WEEK'S RIDDLE: Travel a mile, and I will change. Travel a million miles, and I might be incapable of further change. What am I?
ANSWER: An odometer.
Paul Moffat, MBA, AIF® may be reached at (702)309-9970 or firstname.lastname@example.org
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- 1 - wsj.com/market-data [1/24/20]
- 2 - quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices [1/24/20]
- 3 - cnbc.com/2020/01/24/cdc-confirms-second-us-case-of-coronavirus-chicago-resident-diagnosed.html [1/24/20]
- 4 - cnbc.com/2020/01/24/coronavirus-fear-hits-oil-prices-drop-most-since-may.html [1/24/20]
- 5 - marketwatch.com/story/existing-home-sales-rebounded-in-december-but-extraordinarily-lean-inventories-are-a-growing-concern-2020-01-22 [1/22/20]
- CHART CITATIONS:
- wsj.com/market-data [1/24/20]
- quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices [1/24/20]
- quotes.wsj.com/index/SPX/historical-prices [1/24/20]
- treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [1/24/20]