Pennsylvania Trust

Solid U.S. Economic Numbers Have Eased Coronavirus Fears in the Markets

Solid U.S. Economic Numbers Have Eased Coronavirus Fears in the Markets

Over the past few days, better than expected GDP, employment, and manufacturing reports have helped ease market fears. In addition, the Chinese Central Bank has been intentionally aggressive with commitments of fiscal and monetary stimulus to help stabilize their domestic markets. As a result, markets that have been hit by uncertainties surrounding the coronavirus have rebounded. The S&P has fully recovered last week’s losses while the tech-heavy NASDAQ has set a new record high.

Economic Numbers of Note:

Gross domestic product expanded at a 2.1% annualized rate in the fourth quarter, according to a Commerce Department report Thursday.

  • Despite a slowing American consumer and weaker business investment, the U.S. economy is still showing signs of strength.

The ADP Employment Change showed nearly 300k people were added to the workforce in January Continuing Jobless claims continue to be near 50 year low levels;

  • The turn-of-the-year payroll meltdown apparently promised by the downturn in all the business surveys in the summer and early fall simply hasn’t happened. Businesses don’t like the trade war, but outside manufacturing and farming the real impact appears to have been less than they feared.

The U.S. ISM Manufacturing Sentiment Index increased by 3.1pts to 50.9 in January, above expectations (consensus: 48.5), and returning to expansion territory (above 50) for the first time since last July

  • Manufacturing orders and production were boosted by stronger foreign demand in January, after contracting export orders weighed on sentiment in H2-2019. Foreign countries’ PMIs also point to better prospects for demand for U.S. manufactured goods this year, although the coronavirus is likely to dent this improving momentum in the near-term.

Disclosure: This Commentary represents a review of topics of possible interest to Pennsylvania Trust’s clients and is not personalized investment advice. It contains Pennsylvania Trust’s opinions, which may change following the date of publication. Information obtained from third-party sources is assumed to be reliable but is not guaranteed. No outcome — including performance — is guaranteed, due to various uncertainties and risks. This document is not a recommendation of any particular investment. Investment decisions for clients are made on an individualized basis and may be different from what is expressed here. Past performance is no guarantee of future results.