The U.S. stock market finished the week little changed as renewed trade worries between the U.S. and China nullified gains made from overall positive corporate earnings.  Interest rates dropped as the 10-year treasury yield fell 6 basis points to 2.63%.  Meanwhile the spread between the 10-year treasury and the 2-year treasury remained unchanged at 0.18%.  The price of gold fell 0.30% to $1,318 an ounce while the U.S. dollar index (DXY) jumped from 95.61 to 96.62 as demand for the dollar seems to outweigh the Fed’s tilt towards pausing rate hikes.  The price of crude oil dropped 4.80% to $52.71 a barrel as worries about the global economy lowers the demand for crude oil.

Index               Started Week         Ended Week         Change         Change %         YTD %
DJIA 24,815.0425,983.941,168.904.71%11.39%
Nasdaq 7,453.157,742.10288.953.88%16.68%
S&P 500 2,752.062,873.34121.284.41%14.62%
Russell 2000 1,465.491,514.3948.903.34%12.30%

This Week’s Economic Highlights

  • November 2018 factory order data, which was delayed due to the government shutdown, fell by a more than expected 0.6%.  The drop in factory orders has been primarily attributed to falling oil prices impacting production in oil refineries.
  • The U.S. trade deficit shrunk by $6.4 billion (or 11.5%) to a 5-month low of $49.3 billion in November of 2018.  Imports dropped by 2.9% to $259.2 billion while exports also fell by a more moderate 0.6% to $209.9 billion.  (Note this data was also delayed due to the government shutdown.)
  • Initial unemployment claims fell by 19,000 to 234,000 for the week ending February 2nd, after jumping by 50,000 the week prior.  Continuing unemployment claims dropped by 42,000 to 1.74 million for the week ending January 26th, and is down 170,000 from a year ago.

Tidbit

Despite the U.S. stock market having its best January return in 30 years, more money has been flowing out of U.S. equities and into fixed income securities since the beginning of the year.

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