Moneybeat - A bull market stampede

MARY REICHARD, HOST: Coming next on The World and Everything in It, the Monday Moneybeat.

NICK EICHER, HOST: On Wall Street, the bull market seems in full stampede mode. The Standard & Poor’s 500 index of stocks set a new record high each day last week, except Tuesday. Both the Dow Jones Industrials and the Nasdaq hit records on three of the five trading days. All the major indexes ended the week on all-time highs: the Nasdaq picked up 2.3 percent, the S&P 500 2 percent, and the Dow 1.8. 

Most Wall Street watchers credited the signing of the U.S.-China trade deal for last week’s market optimism.

Now, the very difficult months that led up to that truce—the impasses, the tariffs, the rumors of tariffs—all that kept a lid on industrial production in 2019. The Federal Reserve reported total output in manufacturing, mining, and utilities showed a three-tenths of a percent decline in December. So for the year, industrial production fell a full percentage point versus 2018.

REICHARD: It does appear the housing market is back to good health. It’s been recovering since July, as low mortgage interest rates lure homebuyers and plentiful jobs and strong wages make borrowers attractive to lenders. The one lingering problem has been on the supply side, not enough homes. 

But on Friday, the Commerce Department reported that new home construction surged in December to the highest level in 13 years, during the last housing boom. It rose almost 17 percent month on month. 

For the full year, homebuilders broke ground on 1.3 million new homes. That’s the best showing since 2007, and it represents full-year growth of 3 percent.

EICHER: Retail sales were strong in December, almost 6 percent better year on year versus the dismal December 2018—but. 

But here’s the problem: It’s just 3/10s better than November, which was just 3/10s better than October. In other words, retail sales slowed in the fourth quarter to an annualized growth rate estimated at about 2.5 percent. Here’s why that matters: the third quarter growth rate was more than that, about 3.2 percent, and that’s significant for measuring overall economic growth. Consumer spending drives about two-thirds of GDP, and with retail in the fourth quarter lagging the third, that’s not a particularly good sign for the 2019 GDP report. We should receive that report by the end of this month.

And that is today’s Monday Moneybeat.

(AP Photo/Mary Altaffer, File) In this April 24, 2018, file photo replicas of Arturo Di Modica’s “Charging Bull” are for sale on a street vendor’s table outside the New York Stock Exchange.

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