Hello and welcome to this week’s Jones Financial Blog! Our goal at Jones & Associates is to help keep you up to date with interesting current economic/market happenings as well as some proprietary portfolio happenings. Knowledge is power and thought we would share some of ours with you. Enjoy!
All data is for the week ended February 7, 2020
Improving US economic conditions combined with the addition of billions of dollars into the Chinese markets from their government drove stocks higher around the globe last week. The S&P 500 gained 3.21%, the Russell 2000 added 2.67% while the NASDAQ jumped 4.09%. Overseas the international developed markets (MSCI EAFE) rose 1.86% as emerging markets improved 2.75%. In the US, technology and materials were the best performing sectors while utilities and energy were the worst performers. (1)
Interest rates rose as values declined across most fixed income maturities, with the benchmark 10-year Treasuries up 8 basis points to 1.59%. At mid-week the Federal Open Market Committee report indicated that rates could be cut, but the strong jobs report on Friday made any cuts less likely. (1)
Copper prices hit a near three-year low based on the economic slowdown in China following the spread of the new coronavirus. Over the last two weeks, copper prices have dropped 13% since China is the world’s largest consumer of raw industrial commodities, including copper. (2)
The US added 225,000 jobs in January, well ahead of estimates for a 160,000 gain which is surprisingly strong more than 10 years into this economic expansion. More people re-entered the job force, which resulted in a slight uptick in the unemployment rate to 3.6%. Average wages edged up for a 3.1% gain year-over-year. (3)
The US ISM manufacturing index rose 3.1 points to 50.9 for January, much better than expected, breaking a string of five months of declines and the best report since July. Strength was broad based including employment, production, prices, total new export orders and import orders.
Proprietary portfolio happenings:
AbbVie (ABBV), a G50 holding, reported earnings last week that exceeded expectations. The performance of their predominant drug, Humira, exceeded expectations. Management’s guidance for 2020 was also ahead of consensus estimates. Shares rose 13.9% for the week.
Amazon (AMZN), a G33 and Core Select holding, shares rose 10% in the week following its quarterly earnings report of a solid beat to revenue and earnings.
CME Group (CME), a G50 holding, declared a 13% dividend hike. Yield on the new rate is 1.60%.
Cognizant Technology Solutions Corp. (CTSH), a Core Select holding, reported revenues and earnings that exceeded expectations and raised guidance for the current quarter. Shares rose 13% for the week.
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Sources: (1) JP Morgan Weekly Market Recap 2-10-20, (2) Barron’s: Copper Prices Hit an Almost Three-Year Low Because of Coronavirus 2-7-20, (3) Bureau of Labor Statistics 2-7-20, (4) Institute for Supply Management 2-3-20, (5) AbbVie Investor Relations 2-7-20, (6) Amazon Corp. press release 1-30-20, (7) CME Group Investor Relations 2-5-20, (8) Cognizant Technology Solutions Corp. press release 2-5-20