November Economic Update
Last month fared far better for the markets than the October of just one year ago. The S&P 500 gained 2.04% during the month, topping the even mark of 3,000 once again. The Federal Reserve made its third interest rate cut of the year, which was largely expected and priced into the market. Promising develops arose between the U.S. and China with hopes that the first phase of a new, bilateral trade agreement.
Wall Street also received a boost from respectable earnings reports from many companies, especially those in the tech sector. While some fundamental U.S. economic indicators were underwhelming, the market looked past those concerns and rose towards new highs. (1)
U.S. and China Negotiations
As of the writing of this newsletter, China has reported the two countries have mutually agreed to roll back tariffs as part of a “phase one” trade agreement. The markets rose on such positive news, but faded towards the end of the day as word broke that there is still much disagreement within the White House over the deal. Notably, the White House also has not issued any official statement corroborating the statements from China. (2)
This pattern of “deal or no deal” trade talks has become a pattern as of late. Wall Street’s head has been on a swivel over the last 12 months as positive news is initially reported, only to be refuted or retracted a day or two later. Is this time any different? Probably not.
A mixed bag of economic data was released in October - some positive and some negative. On October 30, the Federal Reserve announced a third interest rate cut of 0.25%, much to the liking of the markets. However, in their official statement, they noted that exports and business investment “remain weak.” (3)
Unemployment remains a bright spot and hit a 50-year low of 3.5%, according to the Department of Labor’s latest report. Consumer spending also rose by 0.2%, signaling that consumers are not tightening their wallets and remain confident. (4,5)