Trade, Fed Chair Powell in Focus
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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 stocks finish the week amid hopes for a U.S.-China trade deal?
Stocks ended higher Friday on rising hopes that the U.S. and China can strike a trade agreement. There was word that President Trump was looking at extending trade talks by two days past the March 1st deadline. The Dow Jones Industrials retook 26,000.
What market moves drove the Dow, S&P and Nasdaq higher this week?
rising 181 points Friday to 26,031. The NASDAQ composite gained 67 points, and the S&P 500 rose 17. Both the Dow and S&P were up more than half a percent on the week. The NASDAQ rose three-quarters percent. We're joined by Jessica Menton, who covers the markets for The Wall Street Journal. Jessica, the major averages are now at their highest level since early November. It's been a great year for stocks following the market trough at the end of 2018.
Why are major averages at their highest levels since November?
Things have really taken off, and this week marked the ninth straight week, if you're looking at the Dow, Nasdaq, and the Russell 2000, of notching gains. And the S&P, it's the fourth week in a row. So, clearly, when you're looking at that, they've just really taken off. And a lot of the beaten-down areas that we saw in the fourth quarter, investors have broad-based, have been scooping up opportunities.
It seems to me much of the rise can be tied to optimism on trade. The White House has said progress was being made on reaching a trade deal to head off tariffs. As mentioned, the White House was weighing extending the March 1st deadline on sanctions by two days. So by the time a lot of people hear this podcast, the deadline may have been extended.
Exactly. And looking ahead towards next week, that deadline is on March 1st. But we also are going to hear from Fed Chairman Jerome Powell on Tuesday and Wednesday. So those are two big things. And in addition to that, we also are going to get the fourth quarter GDP number, which was delayed because of the government shutdown. It is backward looking. So a lot of the investors I've spoken with said they're not going to put too much weight on it. But still, when you look at the fourth quarter, that is a very big quarter when you think of consumer spending, especially during the holidays. So I think that especially there, they're going to look at it. And during the revisions in the coming months for that number two, looking at just where corporate profits are, because although when you look at
Earnings season right now, fourth quarter expectations have been better than a lot of investors have feared. But when you're looking at the current quarter, a lot of those estimates have been downgraded. So I think that's something they're really going to hone in on when you're looking at corporate profits. But again, trade and Fed are going to be really big on the calendar next week.
Oh, just as an aside there, I know profit estimates have been lowered, but do you think the market, the way it has been, stocks could still rise if the results beat these lowered estimates?
It seems as if it can. And there's a few really positive indicators out there. And one of them is the fact that This rally isn't only led by one particular area or a group of stocks, say like with the FAANG stocks the past couple of years. This is very broad-based. It's really being led by beaten down areas like industrials, which got hit hard a lot due to the fact that they are exposed to China. So when we had those trade concerns, it really weighed on that sector. And then also energy, tech is in there, but also consumer discretionary and then financials. So it's not just one group, and I think that's a healthy indication.
Are we getting ahead of ourselves on trade? As of this moment, there's still no real details on what kind of agreement would be reached. You know, the U.S. and China haven't resolved disagreements over things like technology. So I'm just wondering. Obviously, there's hope, but I'm wondering if it's premature.
I asked that question to a lot of investors that I spoke with, especially this week heading into that deadline. And they said that it's almost as if any news is good news for them.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:05–0:10
2
How did stocks finish the week amid hopes for a U.S.-China trade deal?
0:10–0:24
3
What market moves drove the Dow, S&P and Nasdaq higher this week?
0:24–0:49
4
Why are major averages at their highest levels since November?
0:49–5:26
5
How important are trade talks and the March 1 deadline for investors?
5:26–6:34
Speakers
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