It has been a good few months for U.S. stocks.
The S&P 500 SPX, 0. 15% has seen only two days in the last two months where the index has fallen by more than 0.5%, points out Crossing Wall Street blogger Eddy Elfenbein.
There is ample reason for the smooth ride. The Federal Reserve cut interest rates for three straight meetings. Economic data, as smoothed out by the Atlanta Fed’s GDPNow model, now suggests a reasonable 1.5% growth rate for the fourth quarter, as opposed to the 0.3% rate it showed in mid-November. And the U.S. and China continue to talk about reaching a trade deal.
New York fund manager Neuberger Bermangathered its investment team for a conversation about what’s in store for 2020, and the phrase they kept using was “fiscal dysfunction,” which seems apt in a week where President Donald Trump stormed out of a NATO meeting and his chief rival, former Vice President Joe Biden, challenged a voter to an IQ and push-up contest.
Central banks such as the Fed and the European Central Bank have already done much of what they are capable of doing, but governments haven’t.
“When investors’ main concern is whether governments are going to move into the gap left by central banks, and the answer is uncertain because Germany has to run a balanced budget, or because Brexit could rumble on for months or even years, or because a progressive presidential candidate is storming away in the polls, the situation is very different, ”said Ashok Bhatia, Neuberger Berman’s deputy chief investment officer for fixed income.
Joseph Amato, the firm’s chief investment officer for equities, said there could be pullbacks of between 5% and 10% depending how presidential polls go. But he also sees opportunities for a return to the value-versus-growth trade seen in September, and opportunities for Europe, Japan and emerging markets that are more cyclical than the US
The buzz
The Labor Department reported astronger-than-forecast 266, 00 0 new nonfarmjobs in November, with the unemployment rate falling to 3.5%.
China’s Finance Ministry said it would exclude some US soybeans, pork and other commodities from tariffs. The move comes as the U.S. and China are attempting to reach a so-called phase one agreement on reducing trade tensions.
Uber UBER,– 1. (%) reportedmore than 3, 00 0 sexual assaultslast year. Morgan Stanley kept an equal-weight rating on Tesla TSLA,– 0. (%) but saidthere is more upsideat the electric vehicle maker due to the Cybertruck and China.
The markets
US stock futures ES 00, 0. 36% extended gains after the jobs report, and the dollar DXY, 0. 13% shot higher. Bond yields (TMUBMUSD) ******************************************************************************************************************* (Y, 3. 33% also rose.
Both Asian ADOW, 0. 40% and European SXXP, 0. 46% markets rose. Oil CL.1,– 0. 84% edged up.
Chart of the day
What’s the future have in store for US home builders? Well, mortgage rates are low and the economy is solid. That said, builders such as D.R. Horton DHI, 0. 76%, KB Home (KBH, 1. 59%, (LEN, 1. 65% Meritage Homes MTH, 1. 04%, MDC Holdings (MDC, ****** ( 0. (%) and PulteGroup (PHM, ****) 2. 06% have been slowing their land investment rate over the past year, point out analysts at Evercore ISI. The good news is that comparisons in what they call absorptions — that is, sales per community — face easy comparisons for the next few quarters, as the chart shows.
Random reads
Correctional officers in West Virginia were suspended aftera photo emerged of a Nazi salute.
Former President Obama and his familyare now permanent homeowners on Martha’s Vineyard, after plunking down $ 11. 75 million
Birds are getting smaller, and climate change may be to blame.
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