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December 16, 2019 - Phase-One Trade Deal Reached

| December 16, 2019
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The Week on Wall Street
The U.S. and China announced a limited trade agreement last week. That news lifted U.S. and foreign stocks, leading to weekly gains.

Advancing 0.91% on the week, the Nasdaq Composite outperformed the S&P 500 (up 0.73%) and Dow Jones Industrial Average (up 0.43%). The MSCI EAFE index, measuring the performance of developed markets overseas, improved 0.42%.[1][2]

Phase-One Trade Deal Reached, December Tariffs Averted
Friday, White House and Chinese officials confirmed an agreement on what has been characterized as an initial step toward a larger trade pact. As a result of this phase-one deal, new U.S. tariffs (slated to go into effect on December 15) were canceled. The 15% tariffs (imposed on $110 billion of Chinese goods in September) now fall to 7.5%.

In return, China commits to buy greater quantities of American crops, factory goods, and energy products.[3]

Fed Holds Steady on Short-Term Interest Rates

The last Federal Reserve meeting of the year brought no adjustment for the federal funds rate. The vote to leave short-term rates unchanged was unanimous.

After the meeting, Fed chair Jerome Powell told the media, "as long as incoming information about the economy remains broadly consistent with [our] outlook, the current stance of monetary policy will likely remain appropriate."[4]

Retail Sales Disappoint

Economists, surveyed by Bloomberg, expected a retail sales gain of 0.5% for November, but according to the Department of Commerce, the advance was only 0.2%. In a bright spot for analysts who wanted to see a strong start to the holiday shopping season, sales at online retailers rose 0.8% last month.[5]

Note: There will be no Weekly Market Update next week, but we will be back on December 30 with a special "Year-in-Review" edition of the WMU. Have a happy holiday season!

THE WEEK AHEAD: KEY ECONOMIC DATA
Tuesday: The Census Bureau offers a snapshot of November residential construction activity.
Thursday: A look at November existing home sales from the National Association of Realtors.
Friday: November personal spending data and the third estimate of third-quarter economic expansion from the federal government, plus the year's final University of Michigan Consumer Sentiment Index (which measures consumer confidence levels).

Econoday, December 13, 2019
The Econoday 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
Tuesday: FedEx (FDX)
Wednesday: General Mills (GIS), Micron Technologies (MU), Paychex (PAYX)
Thursday: Accenture (ACN), Nike (NKE)
Friday: CarMax (KMX)

Source: Zacks, December 13, 2019
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.


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The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.

The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.

The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indices from Europe, Australia, and Southeast Asia.

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  1. https://www.wsj.com/
  2. https://quotes.wsj.com/
  3. https://www.marketwatch.com/
  4. https://www.bloomberg.com/
  5. https://www.bloomberg.com/
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