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Stock Market News for Nov 15, 2019

Zacks Equity Research

U.S. stocks closed mixed   on Thursday despite continuation of trade impasses. Meanwhile, However, Fed Chairman Jerome Powell reiterated in his Congressional testimony that the U.S. economic fundamentals are pretty strong at present. Both the Dow and the Nasdaq Composite ended in the red while the S&P 500 recorded a fresh high.

The Dow Jones Industrial Average (DJI) slipped 1.63 points to close at 27,781.96. The S&P 500 gained 0.1% to close at 3,096.63. However, the Nasdaq Composite Index closed at 8,479.02, declining 3.08 points. The fear-gauge CBOE Volatility Index (VIX) increased 0.4% to close at 13.05. A total of 6.3 billion shares were traded Thursday, lower than the last 20-session average of 6.9 billion. Advancers outnumbered advancers on the NYSE by a 1.34-to-1 ratio. On Nasdaq, a 1.21-to-1 ratio favored declining issues.   

How Did The Benchmarks Perform?

The Dow closed in negative territory with 18 components of the 30-stock blue-chip index closing in the red while 12 ended in green. The tech-laden Nasdaq Composite ended in the negative territory due to poor performance of large-cap tech stocks. The Nasdaq’s loss was primarily owing to a 7.3% drop in the stock price of Cisco Systems Inc. CSCO. Cisco carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The S&P 500 finished in the green. The Real Estate Select Sector SPDR (XLRE) gained 1%. Notably, eight out of total 11 sectors of the benchmark index closed in the green while three finished in red.

Powell Reiterates Stable Monetary Policy

On Nov 13, in his testimony before the Joint Economic Committee of Congress, Fed Chair Jerome Powell reiterated the central bank’s stable monetary policy that it adopted immediately after the third rate cut on Oct 30.

Per Powell, “We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook of moderate economic growth, a strong labor market, and inflation near our symmetric 2% objective,”

In his latest policy statement on Oct 30, Powell dropped the phrase that Fed would “act as appropriate” to sustain expansion, and said instead that it “will assess the appropriate path of the target range” for fed funds. This clearly indicates the end of mid-cycle (insurance cut) monetary policy adjustment.

At the same time, the Fed Chair has also assured market participants that the central bank will not consider a rate hike until there is a sustained and significant uptick in inflation rate, which was remained muted at below 2% target rate of Fed so far in 2019.

Trade Uncertainty Prevails

On Nov 13, The Wall Street Journal reported that the deadlock in the trade-related negotiation continues regarding withdraw of U.S. tariffs on Chinese goods and China’s earlier commitment about purchasing $50 billion agricultural products from the United States. Chinese administration is also resisting requests from the White House to curb forceful transfer of intellectual properties as well as enforcement mechanisms.

On Nov 12, President Donald Trump delivered a speech at the Economic Club of New York, where he said a U.S.-China trade deal “could happen soon,” and added that a phase one agreement is “close.” At the same time, he threatened more tariff hikes on Chinese imports if the trade negotiation fails to produce an interim agreement. Trump has categorically mentioned that he would only accept the interim trade deal if the agreement worked to the advantage of U.S. workers and businesses.

Economic Data

The Department of Labor reported that the U.S. jobless claims increased 14,000 to a seasonally adjusted 225,000 in the week ended Nov 9, higher than the consensus estimate of 215,000. The number of continuing claims fell by 10,000 to 1.68 million.

U.S. producer’s price index (PPI) for the month of October grew 0.4% higher than the consensus estimate of 0.3%. The 12-month rate of wholesale inflation increased 1.1% compared with 1.4% in the previous month. This was the lowest yearly growth in 3 years. The core PPI that strips out food and energy remained flat in October compared with the consensus estimate of 0.2%. Year over year, core PPI grew 1.5% as against 1.7% in September.

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