Conway’s QuickTake: Week of December 9, 2019

Here’s what happened last week:

U.S. Equities
The S&P 500 Index closed last week up 0.20%, benefitting from a strong jobs report. Small-cap stocks (as measured by the Russell 2000 Index) were strong performers, although they remain behind large-cap stocks for the full-year. Within the large-cap S&P 500 Index, the energy (+1.7%) and consumer staples (+1.1%) sectors outperformed. Industrials (-1.1%) and consumer discretionary stocks (-0.7%) lagged the overall benchmark.

After a period of positive developments between the U.S. and China, global trade negotiations took a more aggressive stance early last week. This largely followed President Trump’s decision to reinstate steel and aluminum tariffs on Brazil and Argentina. President Trump also mentioned that an initial deal with China could be pushed out to 2020 and Commerce Secretary Wilbur Ross reiterated that the planned December 15th tariffs could still occur as planned unless deal talk progress improved. President Trump later walked back on some of these comments and eased market worries. Outside of tariff talk, domestic economic data was mixed. The U.S. labor market remains a bright spot as jobless claims fell to a fifty-year low. Consumer sentiment hit its highest level since May despite ISM’s manufacturing data unexpectedly falling in November, remaining in contraction for the fourth month in a row.

Source: iStock 2019

International Equities
Non-U.S. equity markets mostly outperformed domestic counterparts last week. The developed, international MSCI EAFE Index rose 0.4% while the MSCI Emerging Markets Index logged a nearly 1% weekly gain. Chinese stocks had a strong week, helping support the MSCI EM Index.

European equity markets were little changed despite realizing some volatility from global trade news. Things were more optimistic in the U.K. as polls demonstrated the ruling Conservative Party maintained a lead heading into December 12th elections. The U.K. pound rose to its highest level in 7-months as a result. Chinese equity markets broke a three-week losing streak as comments from Chinese officials suggested that they were getting closer to a trade deal with the U.S. Additionally, Chinese manufacturing data improved, indicating that government stimulus efforts may have been effective.

Credit Markets
Improved labor market data supported longer-term bond yields, causing indexes such as the Bloomberg Barclays U.S. Aggregate Index to finish the week with small losses. The investment grade index also declined roughly 0.2%, despite continued strong demand, particularly from overseas. High yield debt fared best as it got a boost late in the week from improved sentiment and increased buying activity.

Looking ahead…
Monday, December 9, 2019
•China PPI (YoY)
Tuesday, December 10, 2019
•Japan PPI YoY
Wednesday, December 11, 2019
•US Core CPI
Thursday, December 12, 2019
•US Initial Jobless Claims
•Euro area Industrial production

Sources:, Bloomberg, The WSJ, T. Rowe Price Global Markets Weekly Update