It was another sluggish session on Wednesday. The market couldn’t seduce fresh buyers off the sidelines, even after a couple of decent rally efforts that lifted the major indices into the plus column, even if momentarily.
S&P 500 Index | -0.05% |
Communication Services (XLC) | -0.50% |
Consumer Discretionary (XLY) | -0.07% |
Consumer Staples (XLP) | -0.15% |
Energy (XLE) | +0.38% |
Financials (XLF) | +0.38% |
Health Care (XLV) | -0.47% |
Industrials (XLI) | +0.39% |
Materials (XLB) | -0.16% |
Real Estate (XLRE) | -0.32% |
Technology (XLK) | -0.10% |
Utilities (XLU) | +0.12% |
There was intriguing action in oil. Financials and Industrial names found more buyers than any other sector in the final hour of trading. There were a lot of distractions, but the reality is the market needs to digest gains and find catalyst(s) for the next leg higher. However, there has been some commentary about the Dow Jones Industrial Average holding above 26,000 (that’s just a round number), but the real key support point is 25,826.
This morning, we get the fourth quarter 2018 Gross Domestic Product (GDP), which is now expected to come in at 1.9%. The Atlanta Fed lifted their number to 1.8% after it hit 1.4% last week.
Portfolio Approach
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Communication Services 1 | Consumer Discretionary 4 | Consumer Staples 1 |
Energy 1 | Financials 1 | Healthcare 2 |
Industrial 3 | Materials 4 | Real Estate 0 |
Technology 2 | Utilities 0 | Cash 1 |
Today' Session
GDP came in at 2.6% for the fourth quarter, significantly above Wall Street consensus of 1.8% and 2.9% for the year – I’m sure future revisions will take the finally full year number to 3.0% or higher.
Investments 4.6%
- Business 6.2%
- IP 13.2%
Government 0.4%
Meanwhile, the report shows a strong consumer and a sharp rebound in business investments, as well as proof the new tax plan got businesses to investment (see IP chart). The jump in non-residential investment to 6.2% from 2.5% is also encouraging coming into 2019, which is a sign businesses will continue to increase cap ex spending.
Personal savings edged up to 6.7% from 6.4% quarter to quarter reflecting some angst among consumers.
The best sign that taxes moved the needle for business is the sharp increase in investment in intellectual property products.
More Fed speak is unlikely to move markets, but with everyone singing from the same hymn sheet, any diversion would make headlines.
- Vice Chairman Richard Clarida 8 a.m.
- Atlanta Fed President Raphael Bostic 8:40 a.m.
- Philadelphia Fed President Patrick Harker 12:15 p.m.
- Dallas Fed President Robert Kaplan 1 p.m.
- Cleveland Fed President Loretta Mester 7 p.m.
- Fed Chairman Jerome Powell 8:15 p.m.