Worse-than-expected data on industrial production, manufacturing, and consumer spending from the US were not enough to keep the Dow Jones Industrial Average from reaching new record-highs on Friday. The Dow finished the week with over a 220-point gain or 0.08% to 28,004.90. This is the first time in its history that the index touched the 28,000 psychological handle!
The rally in the equities market were fueled by optimism that the US and China would soon complete a phase one deal. It was reported that the US and China had “constructive talks” over tariff negotiations on Friday. This news follows after White House Chief Economic Adviser Larry Kudlow announced that they were “getting close” to a deal earlier last week.
On the other hand, economic data show that growth could be slowing in the US. Industrial production declined by 0.8% which was wider than the 0.4% forecast. The Empire State Manufacturing Index also disappointed market consensus when it showed that manufacturing activity in New York is slowing with the report printing at 2.9 versus the 6.1 forecast. Meanwhile, consumer spending reports were mixed. The headline number came in higher at 0.3% versus the 0.1% estimate and the core reading, which excludes the prices of volatile items, disappointed expectations at 0.2% versus 0.3%.
Healthcare stocks rose over 2% when the government announced a plan to encourage transparency in the healthcare industry. The plan will force hospitals to post standard charges for services, negotiated rates with insurance companies, and discounted prices that they can offer patients. Meanwhile, Boeing continued to be one of the biggest winners as it closed with a 5.8% gain for the week at $371.68.
A few analysts warn that the index could be overbought. This means that any news that could dampen hopes of a US-China trade deal happening soon may push the Dow Jones Industrial Average Index down to its previous highs around 27,780.
Download our latest quarterly market outlook for our longer-term trade ideas.