Stock Market Defies Sentiment and Rises

By Dale Gillham | Published 11 February 2020

In this week’s US Stock Market Report, the market has defied sentiment as it continues to rise.

The good news is that on 14 February China will halve the tariffs it charges on around $75Bn of US imports, which means some tariffs will go from 10 percent to 5 percent, while others will drop from 5 percent to 2.5 percent. This positive outcome from the US china trade war will be good for US manufacturers and it is likely we will see an increase in employment figures.

Right now, the jobless rate is near a 50-year low having fallen steadily over the past decade. In 2012, it was sitting at 9 percent, while in 2014 it was 6.7 percent. The downtrend continued falling to 5 percent in 2015, 4 percent in 2018, and it is currently sitting around 3.6 percent.

The lowest level for the jobless rate was 1.2 percent set back in 1944 during the Second World War, while the highest level was 24.9 percent, which occurred during the great depression. And the lowest post war jobless rate was 2.9 percent set back in 1953. Currently Alaska has the highest unemployment figures at 6.1 percent, with Georgia sitting in the middle at 3.2 percent while Vermont has the lowest rate at 2.3 percent.

But what is even more exciting is that productivity has increased by an annualized 1.4 percent during the 4th quarter of 2019, which is a strong rebound following a decline of 0.2 percent in the 3rd quarter.

Reporting season is still underway, with Uber up nearly 12 percent last week after reporting it could be in profit in the fourth quarter of 2020. The stock has continued to rise almost 59 percent since November 2019. Ubers ride sharing business is three quarters of the company’s revenue, which is profitable, but the other business units, such as Uber Eats are not.

Ford and GM reported last week, and while Ford missed earnings expectations, closing the week down by 8 percent, GM posted stronger than expected earnings. GM was up around 6 percent for the week before falling away to close up just under 1 percent. Like Ford, this stock has gone nowhere over the past 10 years.

After being up 6 percent, Disney fell on expectations the Coronavirus would hit second quarter earnings. It closed up 2 per cent for the week although it is still down 8 percent on its November highs.

Tesla was a surprise packet, as it was up nearly 49 percent last week before it announced the Model 3 rollout will be delayed due to the Coronavirus in China. Tesla kept its Chinese factory closed after Chinese New Year in an effort to look after its employees. On the announcement, Tesla fell to close the week up nearly 15 percent.

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