Performance for Week Ending 1/4/2019:
The Dow Jones Industrial Average (Dow) added 1.61%, the Wilshire 5000 Total Market IndexSM (Wilshire 5000SM) gained 2.11%, the Standard & Poor’s 500 Index (S&P 500) rose 1.86% and the Nasdaq Composite Index (NASDAQ) tacked on 2.34%. Sector breadth was positive with 9 of the 11 of the S&P sector groups finishing the week higher. The Energy sector (+5.03%) was the best performer while Real Estate (-0.76%) was the worst.
||Closing Price 1/4/2019
||Percentage Change for Week Ending 1/4/2019
||Year-to-Date Percentage Change Through 1/4/2019
*See below for Index Definitions
MARKET OBSERVATIONS: 12/31/2018 – 1/4/2019
The major market indices finished the holiday shortened week moderately higher with the bulk of the performance coming on Friday. The late-week rally followed the much better than expected monthly payroll data and soothing words from Fed Chairman Powell. Signs that trade tensions between the US and China continue to thaw added to the positive tone.
Speaking on a panel at the American Economic Association annual meeting, Fed Chairman Powell reiterated his optimism about the growth outlook for the US economy. Powell’s remarks on policy were viewed as calming as he emphasized that policy is not on a “preset path” and with muted inflation readings the Fed can afford to be “patient.” Importantly, Powell also said the balance sheet normalization process could be altered under certain growth/inflation conditions. At the press conference following the December FOMC meeting, Powell stated that the normalization process was on “auto-pilot,” suggesting little flexibility. Over the past several weeks, the market has grown increasingly worried that the Fed may make a policy mistake. However, Powell’s acknowledgement that the Fed is listening carefully to the market’s risk concerns, helped pacify those fears.
You’re Hired: The Labor Department reported that nonfarm payrolls surged by 312K during the month of December, well ahead of the 184K expected by economists. The November data was also revised upward to +176K from the initial estimate of +155K. Wage growth was stronger than expected with average hourly earnings rising by 3.2% on a year-over-year basis, the strongest pace since early 2009.
The Week Ahead: The focal point of the coming week will be the two-day trade summit scheduled between the US and China. On Monday a US trade delegation is due to meet with officials from China in Beijing for two days of trade talks. This will be the first face-to-face meeting since Presidents Trump and Xi Jinping agreed to the 90-day truce back in early December. Reports of interest on the data calendar include: the factory orders, the Institute for Supply Management's (ISM) December non-manufacturing index, the November JOLTS report, and the December consumer price index (CPI). Also of interest will be the release of the December Federal Open Market Committee (FOMC) meeting minutes on Wednesday.
The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally defined as the leaders in their industry. It has been a widely followed indicator of the stock market since October 1, 1928.
Wilshire 5000 Total Market IndexSM represents the broadest index for the U.S. equity market, measuring the performance of all U.S. equity securities with readily available price data. The index is comprised of virtually every stock that: the firm's headquarters are based in the U.S.; the stock is actively traded on a U.S. exchange; the stock has widely available pricing information (this disqualifies bulletin board, or over-the-counter stocks). The index is market cap weighted, meaning that the firms with the highest market value account for a larger portion of the index.
Standard and Poor's 500© Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
The NASDAQ Composite Index is a broad-based capitalization-weighted index of stocks in all three NASDAQ tiers: Global Select, Global Market and Capital Market. The index was developed with a base level of 100 as of February 5, 1971.
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*Assets under management is as of 12.31.2018 and includes leverage of $12.4bn. Guggenheim Investments represents the investment management businesses of Guggenheim Partners, LLC ("Guggenheim"), which includes Security Investors, LLC ("SI"), Guggenheim Funds Investment Advisors, LLC, ("GFIA") and Guggenheim Partners Investment Management ("GPIM") the investment advisers to the referenced funds. Securities offered through Guggenheim Funds Distributors, LLC, an affiliate of Guggenheim, SI, GFIA and GPIM.
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