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During the last shortened trading week, the US stock market lost some ground as concerns regarding the new coronavirus outbreak in China overshadowed strong financial results reported by a number of companies, including Intel Corporation (NASDAQ: INTC), American Express Company (NYSE: AXP), and IBM (NYSE: IBM). US stock markets were closed on Monday, January 20 on the back of Martin Luther King Day, but between January 21 and January 24, the S&P 500 lost 0.76%, followed by the Dow Jones Industrial Average and NASDAQ Composite, which recorded declined of 0.71% and 0.60%, respectively.
The spotlight for the past week was on China, where an outbreak of a new coronavirus already killed over 40 people and the number of infected people surged to more than 2,000. The virus already managed to spread to other countries, including South Korea, Japan, France, and the US. Despite the fact that the World Health Organization declined to raise an international virus alert and health experts suggest that the virus will not be disruptive, investors remained concerned about the impact of the virus on the Chinese economy. However, some analysts suggest that the coronavirus could be just an excuse for investors to sell off stocks that are trading near record highs.
On the other hand, the ongoing earnings season in the US continues to bring good news. According to FactSet, by January 24, 17% of the companies in the S&P 500 had reported their results for the fourth quarter. Of these companies, 73% managed to post better-than-expected EPS and 67% topped sales estimates, both figures being above 5-year averages.

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Between January 13 and January 17, the Dow Jones Industrial Average advanced by 1.53%, while two other benchmark indexes, the S&P 500 and NASDAQ Composite appreciated by 1.26% and 1.24%, respectively. The bullish sentiment was fueled by positive economic data, the signing of the phase one trade agreement between the US and China and a strong start to the fourth-quarter earnings season.
In the US, housing starts surged by 16.9% in December, reaching a 13-year high. Retail sales advanced by 0.3% last month, which shows that the economy maintained a growth trajectory towards the end of 2019. In China, industrial production surged by 6.9% on the year last month, which represents the highest pace of growth in nine months, although the economic growth in China slowed to 6.1%, which was still in line with expectations.
The details from the US-China trade deal showed China increasing purchases of manufacturing, energy and agricultural goods and services by at least $200 billion over two years, including $77.7 billion in acquisitions of manufactured goods, $32 billion in agricultural products, $52.4 billion in energy, and $37.9 billion in services. In addition, China will submit an action plan to strengthen intellectual property protection within 30 days and will stop pressuring American companies to share technology with local joint-venture partners. However, despite signing the deal, tariffs on Chinese imports remain in place until the agreement’s second phase is completed.

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US stocks started last week trading lower as investors were jittery over the tensions in the Middle East. However, as the prospect of an open military conflict with Iran was dimmed by President Trump’s comments, markets managed to recover and even the mixed jobs report did not prevent the main indexes from closing higher. The NASDAQ Composite advanced by 1.18%, with many tech stocks that are part of the index gaining ground amid reports that Chinese Vice Premier Liu He will travel to Washington this week to sign a phase-one trade agreement. The Dow Jones Industrial Average inched up by 0.42% and even managed to briefly touch the 29,000 mark for the first time in history. The S&P 500 appreciated by 0.59%.
Investor sentiment was mainly driven by the ongoing Iran-US conflict for most of the last week with some investors moving towards safe havens such as gold, oil and defense stocks. On Tuesday, Iran fired 15 ballistic missiles at military bases in Iraq housing US and coalition forces, although no casualties on the American or Iraqi side were reported. The following day, President Trump addressed the nation and said that the US will pursue further economic sanctions against Iran instead of escalating military conflict. Trump’s comments managed to soothe investors and helped move stocks higher.
In addition, there were two jobs reports last week. On Wednesday, the December ADP jobs report showed a gain of 202,000 jobs, higher than the consensus estimate of 157,000 and the previous month’s print of 124,000. This was the largest gain in eight months. However, nonfarm payroll data was less positive, showing a gain of just 145,000 jobs versus expectations of 164,000 and a November figure of 256,000. The unemployment rate of 3.5% was in line with estimates and the average hourly earnings growth of 2.9% on the year was lower than the consensus of 3.1%.

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The US stock market had a strong end of 2019 and was on track for a great start of the year until an escalation of tension between the US and Iran sent most stocks lower. Nevertheless, stock market indexes gained ground last week, with the S&P 500 advancing by 0.42%, the Dow Jones Industrial Average growing by 0.61%, and the NASDAQ Composite appreciating by 0.84%...

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Over the past week, the major US stock indexes gained ground led by the NASDAQ Composite, which appreciated by 1.31%. The S&P 500 and the Dow Jones Industrial Average advanced by 1.05% and 0.81%, respectively.
Three major catalysts were behind US stock market performance last week. Trade with China remained in the spotlight amid reports that a phase one deal was reached in principle and the US agreed to cut existing tariffs by up to 50% on $360 billion worth of Chinese imports and to cancel a new round of tariffs that was set to take effect on December 15. The announcement was preceded by signals that the deal could be delayed and that the previously announced date of December 15 was not the final date to reach a deal.
In addition, the FOMC decided to hold rates unchanged at the Wednesday’s policy meeting. The Fed also suggested that it won’t raise rates in 2020. Fed Chair Jerome Powell reiterated the need for a steady rise in inflation to warrant a further rate hike. The central bank expects 1.9% inflation next year and 2.0% in 2021. Across the pond, the European Central Bank also kept its deposit rate at a record-low negative 0.5% and bond purchases at 20 billion euros ($22.30 billion) per month. In her first press conference since she took over as the president of the ECB, Christine Lagarde suggested that the central bank would continue with its accommodative policy to stimulate inflation.

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The US stock market registered mixed performance last week helped by trade optimism, a wave of M&A deals, and positive economic data. The S&P 500 and the NASDAQ Composite inched up by 0.23% each, while the Dow Jones Industrial Average declined by 0.05%.
In a big step-up in trade negotiations, China reportedly agreed to raise penalties for intellectual property violations and to lower punishment thresholds for intellectual property theft. The move was a positive sign that could see both countries reach a phase one agreement. However, closer to the end of the week investors were a bit cautious after president Trump signed a bill supporting Hong Kong protesters into law. It remains to be seen whether this will affect negotiations.
In addition, the beginning of the week saw three major deals. Charles Schwab Corporation (NYSE: SCHW) announced that it would buy TD Ameritrade Holding Corp. (NASDAQ: AMTD) for $26 billion. eBay Inc (NASDAQ: EBAY) agreed to sell online ticket exchange platform StubHub to Viagogo for $4.05 billion in cash. LVMH Moet Hennessy Louis Vuitton SE (OTC: LVMHF) entered into an agreement to buy American luxury retailer Tiffany & Co. (NYSE: TIF) for $16.20 billion.

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