Bank Earnings, Fed Minutes On Tap
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What is the main topic discussed in this episode?
With your money briefing, I'm Charlie Turner in New York for The Wall Street Journal.
How did major U.S. indexes perform during the week and what were the headline market moves?
Stocks ended higher Friday, capping a quiet week of trading. The Dow Jones Industrials rose 40 points to finish the week at 26,424. The Nasdaq Composite rose 46 points. And the S&P 500's winning streak is at 7 after a gain of 13 points. For the week, the Dow rose 1.9%. The Nasdaq rose 2.7%. The S&P gained around 2.1%. Mike Worsthorn covers the markets for The Wall Street Journal. Well, Mike, what drove the markets higher this week? And I'm asking because I don't know.
Well, it's interesting.
Why did the S&P 500 record a seven-day win streak despite low trading volume?
So this is the longest win streak, seven days for the S&P 500 since October 2017. It's a great record, you would say. But if you look at the actual gain over that time, it was the biggest gain since just last week over that seven-day stretch. The market barely moved. There was, in fact, one day during the week where where the S&P barely rose at all. It was basically unchanged. So what that just basically means is that the market was very quiet. There was very little trading activity the last few days, and investors were very much eagerly anticipating earnings. So while there wasn't, say, a lot driving the market higher, there also wasn't a lot to drive it lower.
What did the March employment report reveal and how might wage growth affect markets?
So it was really just very flattish over that seven-day stretch. That said, the market's facing this big test with earnings coming up.
The March employment report was pretty much as expected, you know, job growth topmost forecast, 196,000.
It gave investors that confidence that they just needed additionally a bit more, especially after that last jobs report, that the economy here in the U.S. is in fact okay. You're seeing very robust employment growth. And anything over 100,000 in terms of jobs added over a month, that's a good sign for markets. The one concerning thing that may have explained some of the softness that you saw is that wage growth did come down a little bit, and it's one of those double-edged swords for the market in the sense that higher wage growth means that employees are making more and consumers are spending, but that also means inflation is rising. Lower wage growth, though, could also suggest that there might be some
weakening in the job market that we're facing right now. And that's the big question for investors is how long can this hot job market really last? We don't really know that yet. And this jobs number doesn't really give people the sense of whether or not that this is something that's running out of steam or we're just sort of continuing along.
A weekly occurrence, it seems, is hopes for a U.S.-China trade deal, although no summit date was announced between President Trump and Chinese leader Xi Jinping.
How are U.S.-China trade hopes influencing investor sentiment right now?
Investors are very much priced in the optimistic trade scenario, even though all these discussions are still going on. There hasn't been a lot of updates. But with the way the White House is framing it, investors are very much willing to look at the fact that a deal is going to come. So that is another issue for the market at any point, that if there is going to be a sign that there isn't going to be a trade deal, that's going to take the market to step back. But right now, the market is pricing that factor in at the moment and is helping with the recent gains that we've seen.
Mike, this week's gains have continued the strong gains for 2019, led by the Nasdaq Composite, which is up almost 20% this year. S&P 500 is up about 13%. Are investors wary at this point because of a global economic slowdown, Brexit, which, as we speak, remains in great flux?
The S&P 500 is at its best start right now since 1998. So for investors, there is this constant feeling of concern and fear that this could all end. I mean, it wasn't just that long ago that January 2018 markets were up double digits. And then over the course of several weeks, almost all of that was wiped out. So the markets can move quickly. And this has been a very incredible recovery since that December 24th low when the markets were really tested. So there is a wariness on the part of investors that we are possibly facing some massive bout of volatility because the gains may not be sustainable longer term, especially as we get into earnings.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:06–0:10
2
How did major U.S. indexes perform during the week and what were the headline market moves?
0:10–0:43
3
Why did the S&P 500 record a seven-day win streak despite low trading volume?
0:43–1:21
4
What did the March employment report reveal and how might wage growth affect markets?
1:21–2:39
5
How are U.S.-China trade hopes influencing investor sentiment right now?
2:39–4:06
6
What risks do investors see after strong year-to-date gains and why is there wariness?
4:06–4:39
7
How could upcoming bank earnings and a negative Q1 profit forecast test the market?
4:39–5:34
8
What key economic reports and Fed minutes should investors watch next week?
5:34–7:11
Speakers
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