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Friday’s performance marked large rally

This just in via email from Oak Partners, Inc.   You can visit their web site at http://www.oakpartners.com/

For the week, the S&P 500 gained 1.86%, the Dow added 1.61%, and the NASDAQ increased 2.34%.[2] MSCI EAFE stocks also increased, posting a 1.42% weekly gain.[3]
While the results may not seem especially dramatic, the path to get there certainly was. On Thursday, January 3, domestic stocks plunged, as factory data and a tech warning spooked investors.[4] Then, the next day, the S&P 500, Dow, and NASDAQ each gained at least 3.3%.[5] Friday’s performance marked one of the largest rallies since the beginning of this bull market.[6]

What drove the market rally?

Two key events contributed to the huge jumps on Friday: 1) the latest labor report and 2) comments from the Federal Reserve Chairman.[7]

1. December’s labor report exceeded projections.

Many people expected that the economy would add around 176,000 jobs last month. Instead, the latest data revealed that the increase was actually 312,000 new jobs in December – drastically beating expectations.[8] Not only did last month’s labor report show more jobs added than anticipated, but wage growth and labor market participation also increased.[9]

Why does this data matter?

Investors have been very concerned that economic growth is slowing. This data helped quell worries that a recession is ahead.[10]

2. The Fed shared new policy perspectives.

Fed Chair Jerome Powell told the American Economic Association that the Federal Reserve understands the market’s worries and hasn’t predetermined its future interest rate hikes.[11]

Why does this update matter?

Some of the uneasiness the markets have shown recently are a result of concerns that the Fed is tightening monetary policy too quickly. Powell’s comments indicate the Fed is sensitive to economic conditions, an update that many investors wanted to hear.[12]


[1] www.bloomberg.com/news/articles/2019-01-04/all-the-days-are-big-days-for-stocks-as-bulls-bears-trade-blows?srnd=premium

[2] http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=%21DJI®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO

[3] www.msci.com/end-of-day-data-search

[4] www.bloomberg.com/news/articles/2019-01-03/asia-stocks-to-track-u-s-losses-on-growth-worries-markets-wrap?srnd=markets-vp

[5] https://www.cnbc.com/2019/01/04/stock-market-investors-react-to-us-china-trade-talks.html

[6] www.bloomberg.com/news/articles/2019-01-03/asia-stocks-to-track-u-s-losses-on-growth-worries-markets-wrap?srnd=markets-vp

[7] www.cnbc.com/2019/01/04/stock-market-investors-react-to-us-china-trade-talks.html

[8] www.cnbc.com/2019/01/04/stock-market-investors-react-to-us-china-trade-talks.html

[9] www.bloomberg.com/news/articles/2019-01-03/asia-stocks-to-track-u-s-losses-on-growth-worries-markets-wrap?srnd=markets-vp

[10] www.bloomberg.com/news/articles/2019-01-03/asia-stocks-to-track-u-s-losses-on-growth-worries-markets-wrap?srnd=markets-vp

[11] www.reuters.com/article/us-usa-stocks/wall-st-rebounds-on-robust-jobs-report-dovish-powell-remarks-idUSKCN1OY154

[12] www.cnbc.com/2019/01/04/stock-market-investors-react-to-us-china-trade-talks.html

[13] www.bloomberg.com/news/articles/2019-01-03/asia-stocks-to-track-u-s-losses-on-growth-worries-markets-wrap?srnd=markets-vp

[14] www.reuters.com/article/us-usa-stocks/wall-st-rebounds-on-robust-jobs-report-dovish-powell-remarks-idUSKCN1OY154


Economic Review from Oak Partners

Illustration of a rightward shift in the demand curve

Illustration of a rightward shift in the demand curve. Artist: SilverStar at English Wikipedia.

This just in via email from Oak Partners, Inc.


Although new data continued to show strength in the U.S. economy, markets stumbled across the globe last week. While U.S. and international stocks followed similar paths last week, data is beginning to show that our economic outlooks may be very different for the moment.

U.S. Strength in a Growing International Divide

The latest labor report helped underscore some of the differences between the U.S. economy and the rest of the world. While the data missed the mark for new jobs added, September marked the 96th-straight month of job growth – and the lowest unemployment level since 1969. The report pushed interest rates higher, which contributed to last week’s equity losses.

However, when describing our economy, Federal Reserve Chair Jerome Powell said it is experiencing “a particularly bright moment.”

Global Growth Adjustments

At the same time, the International Monetary Fund (IMF) indicated that it would decrease its global economic growth predictions. The IMF hasn’t downgraded its forecasts since 2016. Currently, more risks are beginning to emerge – from trade tension to political challenges in Europe. In particular, the rise in oil prices, the U.S dollar, and interest rates are hurting emerging economies.

HSBC mirrored this divide, cutting its global economic outlook while upgrading U.S. numbers.