The first full week of the new decade saw gains across all 5 of the major markets. The tech focused NASDAQ led the pack higher as growth in the IT market continued into the new year.
Not surprisingly, the Information Technology sector was the best performer last week as a result. In total, 7 out of 11 sectors closed the week higher. The other 4 sectors ended only slightly lower except for Energy, which gave back over a percentage point last week.
Oil prices had initially spiked early in 2020, due to middle east turmoil. The Trump administration assassinated an Iranian General (Qassem Soleimani) in response to a New Year’s Eve attack on a US Embassy in Baghdad.
Last week, Iran launched a retaliatory attack by sending a number of missiles towards US Troops stationed at multiple bases in Iraq.
Thankfully, there were no American casualties. However, amidst the tension a civilian Ukraine plane was shot down after it was mistakenly targeted by Iran. While turmoil remains in the region, these events have caused the focus to shift away from the American actions and instead toward Iranian leadership, alleviating some of the risk priced into crude oil and consequently causing the Energy sector to drop in turn.
Looking at stocks across capitalizations, the divergence between value and growth and small-cap and large cap was evident again last week. While there have only been a few trading days so far this year, small-cap value sits at a loss for the year, while large cap growth continues the gains. For investors, diversification beyond Large Cap growth explains the underperformance relative to the S&P 500.
Finally, the first jobs report of the new year, or more accurately, the final job report of last year was released last week. The December Employment Situation Report missed expectations of 160,000 with an increase of only 145,000. Nevertheless, the Unemployment Rate remains at the 50-year low of 3.5%.
The S&P 500® Index is a capitalization index of 500 stock-designed to measure performance of the broad domestic economy through changes in the aggregate market value of stock representing all major industries.
The Dow Jones Industrial Average® (The Dow®), is a price-weighted measure of 30 U.S. blue-chip companies. The index covers all industries except transportation and utilities.
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The MSCI World Index, which is part of The Modern Index Strategy, is a broad global equity benchmark that represents large and mid-cap equity performance across 23 developed markets countries. It covers approximately 85% of the free float-adjusted market capitalization in each country and MSCI World benchmark does not offer exposure to emerging markets.
The MSCI Emerging Markets (EM) Index is designed to represent the performance of large- and mid-cap securities in 24 Emerging Markets countries of the Americas, Europe, the Middle East, Africa and Asia. As of December 2017 it had more than 830 constituents and covered approximately 85% of the free float-adjusted market capitalization in each country.
The S&P GSCI Crude Oil index provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market.
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