US Stock Market Overview – Stocks Hit Fresh Highs, Led by Communications; Powell Buoys the Market

All three major averages hit fresh all-time highs
David Becker
s-2019 (7)

US stocks moved higher on Wednesday led by a surged in the Dow Industrials. All through major indices were higher, notching up fresh all-time highs. Most sectors in the S&P 500 index where higher, led by a 1.5% rally in communications. Consumer staples bucked the trend. The dollar continues to climb as global investors continued to buy us dollar-denominated assets. Gold prices edged lower, while crude oil prices rallied and recaptured the $50 handle on WTI. US yields moved higher as riskier assets gained traction.

Fed Chair Powell Testifies in Front of the Senate

Fed Chair Jerome Powell testified in front of the Senate a day after his testimony to the House. Jerome Powell said that the Fed was standing at the ready and would use all of its tools to keep growth on a steady course. This is keeping the markets buoyed. In addition, it appears that the Chinese central bank (the PBOC) continues to add liquidity which is helping to buoy US stocks. The market appears to be pricing in a small decline in Q1 GDP, and then a rebound in the Q2. What is not priced in is an extended downturn do to the coronavirus.

Energy shares moved higher on Wednesday despite a downgrade by OPEC which lowered its growth forecast for demand. In addition, the EIA released its estimates of inventories which also came in higher than expected. The US S&P energy sector rallied 1.25% on the session.


Debt at the Household Level Continues to Rise

Household debt surged in 2019, according to the New York Federal Reserve. Total household debt balances rose by $601 billion last year, topping $14 trillion for the first time. The last time the growth was that large was 2007, when household debt rose by just over $1 trillion. Housing debt now accounts for $9.95 billion of the total balance. Balances for auto loans and credit cards both increased by $57 billion for the year, according to the Fed.

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