Stocks in Wait-and-See Mode
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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. stock indices perform at the end of this week?
Stocks ended higher Friday with both the Dow Jones Industrials and S&P 500 breaking a three-day losing streak. The Dow closed up 110 points Friday at 26,026. The Nasdaq Composite jumped 62 points and the S&P gained 19. The Dow finished just five points lower on the week, breaking its run of nine straight positive weeks. NASDAQ's on a 10-week winning streak, up 0.9% for the five days, and the S&P rose 0.4%. Here to talk about the week's market action, as well as what may lie ahead, is Wall Street Journal Markets reporter Jessica Menton. Well, Jessica, after a great start to the year, including a 3% gain for the markets in February, it was a rather bumpy week.
Why are investors described as being in a 'wait-and-see' mode after a strong start to 2019?
Are investors basically catching their breath?
It seems like the markets took a breather this week because we did have quite a run-up. Even the last day of February, on Thursday, we saw the markets, if you're looking at the Dow and the S&P, have their best two-month start to a year in about three decades, and so because of this big run-up, a lot of investors I've spoken with were saying now they're sort of in this wait-and-see mode as far as we're a big past earnings season and things have been largely better than a lot of investors were fearing, and then we're still waiting on the trade fund. But looking at the Federal Reserve, they've still maintained their dovish stance, so now a lot of catalysts are looking to next week, because on Friday we are going to get that jobs report number.
On Friday, this past Friday, the markets pulled back from session highs but still closed on the upside, even with a report showing December consumer spending falling half a percent.
Right. And then we also got GDP numbers for the fourth quarter, and it looked like consumer spending offset a rise in business investment. And so even though, obviously, the consumer powers the economy, the numbers still came in a bit better than before. what a lot of investors were anticipating, so even though those came through, I don't think that necessarily completely weighed on the entire market, but it looks as if investors really are just taking a step back after this huge run-up that we've seen.
And briefly mentioned profits, you know, fourth quarter profits, according to FactSet, I think are up 13%. So, you know, that's been a positive for the markets as of late.
It really has. And we're close to nearly 97% of S&P 500 companies reporting. So we're almost past fourth quarter earnings season. And now investors are looking ahead to see how analysts are anticipating the current first quarter and how expectations are.
How did recent economic data (consumer spending and GDP) influence market sentiment?
We obviously aren't going to get the fiscal tax cuts that we saw in the beginning of 2018 rollover. So clearly this year has been downgraded a little bit. But overall, it seems like the outlook from management at these big corporations is still better than what a lot of investors were fearing, especially after the fourth quarter sell-off and the concerns of a looming recession.
Is the trade situation between the US and China still the main focus for investors? The US has decided for now not to impose tariffs. They've extended the deadline until who knows when.
That's really the forefront of what a lot of investors have been telling me as far as when it comes to a catalyst of what could propel the market even higher. Because as we are in sort of this sideways move that we've seen this week, I think any sort of deal, even if it isn't completely what certain hawks are looking for, it almost seems like anything would be better than what investors are anticipating.
What upcoming economic reports and earnings should investors watch next week?
So that's clearly going to be on their radar, as well as more economic indicators out there, especially housing data next week, as well as employment numbers.
So yeah, we do have the jobs report.
What did fourth-quarter earnings and corporate outlooks reveal about market health?
We've got new home sales, but are basically investors looking for the next move, whatever that might be?
Yes, and I think as long as the data remains strong and we don't have any sort of numbers come through that shows a broader trend of whether or not the economy could be slowing more than expected, I think that's still a solid sign for the economy.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:05–0:10
2
How did major U.S. stock indices perform at the end of this week?
0:10–0:50
3
Why are investors described as being in a 'wait-and-see' mode after a strong start to 2019?
0:50–2:47
4
How did recent economic data (consumer spending and GDP) influence market sentiment?
2:47–3:45
5
What upcoming economic reports and earnings should investors watch next week?
3:45–3:55
6
What did fourth-quarter earnings and corporate outlooks reveal about market health?
3:55–4:54
7
How is the U.S.-China trade situation affecting investor expectations and market catalysts?
4:54–5:57
Speakers
2 identifiedMore from WSJ Your Money Briefing
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