Market Commentary for Week Ended 11/22/2019

This week marked the first weekly decline for the S&P 500 in six weeks and it was only down 0.25%.  Continued trade optimism, narrative the Federal Reserve will support any market declines and seasonality has led to low levels of volatility in the past few weeks.  This week was no exception.  The market did sell off almost 1% on Wednesday on news that progress on a phase 1 deal wasn’t likely to be achieved until next year.  The market quickly rallied back, however.  

Meanwhile, long-term interest rates continued to fall this week on continued global growth concerns. 

Economic Data Recap

Here is a summary of the notable economic data points released during the week.  The housing data came in as expected while the FOMC minutes confirmed the fed’s dovish market support.

1. 11/19 Housing Starts: The most closely followed report on the housing sector.  A housing start is tallied when shovels break ground to build the foundation of a building or house.  Builders only start a house when they are confident that it can be sold and is thus a good gauge on perceived risks on the future economy by builders.  Housing starts matched the consensus in October as shown below.

Result:  (source: econoday.com)

2. 11/20 FOMC Minutes:  The Federal Open Market Committee (FOMC) releases the minutes from their monthly meeting 3 weeks after the meeting.  The minutes were perceived to be accommodative to the market.  For example, the minutes noted that markets expected a December rate cut at the time of the October meeting.  The fed acknowledgment of market expectations, rather than just economic data, indicates an interest rate calculus that may be more forward looking than previously thought.

3. 11/21 Existing Home Sales:  The metric is just as it sounds, the number of previously constructed homes of which a sale occurred in the previous month.  This is yet another read on consumer confidence.  You have to feel pretty confident about your earning prospects to buy a house.  Existing home sales came in just below expectations as shown below.

Result:  (source: econoday.com)