Stocks in Wait-and-See Mode

Summary

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WSJ Your Money Briefing

Episode Title: Stocks in Wait-and-See Mode
Date: March 1, 2019
Host: Charlie Turner
Guest: Jessica Menton, Wall Street Journal Markets Reporter

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Episode Overview

This episode examines the state of the US stock market at the close of February 2019. After a strong start to the year and a period of gains, the market appears to pause, with investors in a "wait-and-see" mode. Host Charlie Turner and WSJ markets reporter Jessica Menton discuss recent market performance, investor sentiment, economic indicators, and the factors shaping expectations for coming weeks—especially trade tensions with China, Federal Reserve policy, and upcoming economic data releases.

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Key Discussion Points & Insights

1. Market Performance Recap

• Market Rebound after Slump
  • The Dow, S&P, and Nasdaq all closed higher Friday, snapping multi-day losing streaks.
  • For the week:
    • Dow: Ended just 5 points lower, breaking a nine-week streak of gains
    • Nasdaq: Continued its run, now on a ten-week winning streak, up 0.9% for the week
    • S&P 500: Up 0.4% for the week
  • Quote (Charlie Turner, 00:36):
    “Stocks ended higher Friday with both the Dow Jones Industrials and S&P 500 breaking a three day losing streak. The Dow closed up 110 points Friday at 26,026. The Nasdaq Composite jumped 62 points and the S&P gained 19.”

2. Investor Sentiment: Taking a Breather

• After a Strong Rally, a Pause
  • Large gains in January and February led to a more cautious approach this week, with many investors seeing the market as in a "wait-and-see" state after a powerful rally.
  • Quote (Jessica Menton, 01:23):
    "A lot of investors I've spoken with were saying now they're in this wait and see mode."

3. Key Catalysts and Risks

• Earnings Season Recap

  • Nearly all S&P 500 companies have reported Q4 earnings, with profits up about 13% (FactSet).
  • Many corporate outlooks are more optimistic than feared, given concerns about a possible recession after the Q4 market selloff.
  • Quote (Jessica Menton, 03:01):
    “We're close to nearly 97% of S&P 500 companies reporting. We're almost past fourth quarter... and now investors are looking ahead to see how analysts are anticipating the current first quarter.”

• Macroeconomic Data Under Scrutiny

  • December's consumer spending fell 0.5%, but fourth-quarter GDP was better than expected, with consumer spending offsetting a rise in business investment.
  • Quote (Jessica Menton, 02:20):
    “It looked like consumer spending offset a rise in business investment... The numbers still came in a bit better than what a lot of investors were anticipating.”

• Trade Tensions: The Central Question

  • The ongoing US-China trade negotiations remain a key source of uncertainty and the primary market catalyst. The US has postponed new tariffs, but no deadline is set for further action.
  • Even a partial deal could trigger significant market movement.
  • Quote (Jessica Menton, 03:51):
    “That's really the forefront of what a lot of investors have been telling me... any sort of deal, even if it isn't completely what certain hawks are looking for, it almost seems like anything would be better than what investors are anticipating.”

• Federal Reserve Policy

  • The Fed’s continued “dovish stance” (favoring low rates and patience) is supporting the market outlook.

4. Upcoming Data and Investor Expectations

• Jobs and Housing Data in Focus
  • The February jobs report is highly anticipated, alongside delayed new home sales and construction data, both postponed by the government shutdown.
  • Investors will also watch for reports on auto sales, non-manufacturing activity, consumer credit, trade balance, productivity, and private payrolls.
  • Quote (Charlie Turner, 05:33):
    “The February jobs report due out this Friday is the economic highlight in the new week.”
• Retailer Earnings as a Consumer Gauge
  • Retail earnings reports (Target, Costco, Kroger, etc.) are expected to offer insights into the strength of consumer demand post-holiday season.
• Continued Market Rotation

  • All S&P sectors posted back-to-back gains in the first two months of 2019—a feat not seen since 2013.

  • Industrials and cyclicals rebounded strongly, partly as trade fears eased.

  • Quote (Jessica Menton, 04:32):
    “…first two months since I believe it was 2013 that every sector in the S&P 500 posted back to back gains. That was really led by industrials which got hit hard... due to the fact that they're exposed overseas, especially in China. And... since those [trade] concerns... have eased, it's really helped cyclical areas like that.”

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Notable Quotes & Memorable Moments

• On the Market’s Breather:
  "It seems like the markets took a breather this week because we did have quite a run up even the last day of February."
  — Jessica Menton, 01:23

• On Trade Tensions Driving Uncertainty:
  "That's really the forefront of what a lot of investors have been telling me as far as when it comes to a catalyst of what could propel the market even higher..."
  — Jessica Menton, 03:51

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Timestamps for Important Segments

• 00:36: Weekly market summary and sector performance
• 01:23: Investors entering "wait-and-see mode"
• 02:10: Impact of consumer spending and GDP numbers
• 03:01: Q4 earnings wrap-up and forward outlook
• 03:41: Trade negotiations as the next major catalyst
• 04:32: Sector rotation and what's driving gains
• 05:33: Preview of upcoming economic data and earnings

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Tone and Language

The conversation is analytical but accessible—anchored in data, focused on investor sentiment, and practical for listeners considering market moves or simply tracking financial news.

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Summary Usefulness:
This recap is designed for listeners seeking a concise yet thorough understanding of current Wall Street trends, the mood among institutional investors, and what major economic reports lie ahead in early March 2019. It covers all critical topics and provides direct quotations and timestamps, creating a clear and informative resource for those who haven't heard the episode.

Transcript

[A]

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[B]

With your money briefing. I'm Charlie Turner in New York for the Wall Street Journal. Stocks ended higher Friday with both the Dow Jones Industrials and S&P 500 breaking a three day losing streak. The Dow closed up 110 points Friday at 26,026. The Nasdaq Composite jumped 62 points and the S&P gained 19. The Dow finished just five points lower on the week breaking its run of nine straight positive weeks. Nasdaq on a ten week winning streak up 0.9% for the five days and the S&P rose 0.4%. Here to talk about the week's market action as well as what may lie ahead is Wall Street Journal markets reporter Jessica Menton. Jessica, after a great start to the year, including a 3% gain for the markets in February, it was a rather bumpy week. Are investors basically catching their breath?

[C]

It seems like the markets took a breather this week because we did have quite a run up even the last day of February. On Thursday we saw markets, if you're looking at the Dow and the S and P have their best two month start to a year in about three decades because of this big run up. A lot of investors I've spoken with were saying now they're in this wait and see mode as far as we're a big past earnings season and things have been largely better than a lot of investors were fearing then. We're still waiting on the trade fund, but looking at the Federal Reserve, they've still maintained their dovish stance. Now a lot of catalysts are looking next week because on Friday we are going to get that jobs report number on Friday.

[B]

This past Friday the markets pulled back from session highs but still closed on the upside. Even with a report showing December consumer spending falling 0.5%.

[C]

Right then we also got GDP numbers for the fourth quarter. It looked like consumer spending offset a rise in business investment even though obviously the consumer powers the economy. The numbers still came in a bit better than what a lot of investors were anticipating even though those came through. I don't think that necessarily completely weighed on the entire market, but it looks as if investors really are just taking a step back after this huge run up that we've seen.

[B]

Briefly mentioned profits. Fourth quarter profits according to FactSet, I think are up 13%. That's been a positive for the markets as of late.

[C]

It really has. We're close to nearly 97% of S&P 500 companies reporting. We're almost past fourth quarter quarter earnings season and now investors are looking ahead to see how analysts are anticipating the current first quarter and how expectations are. We obviously aren't going to get the fiscal tax cuts that we saw in the beginning of 2018 rollover. So clearly this year has been downgraded a little bit. But overall it seems like the outlook from management at these big corporations is still better than what a lot of investors were fearing, especially after the fourth quarter sell off and the concerns of our looming recession.

[B]

Is the trade situation between the US And China still the main focus for investors? The US has decided for now not to impose tariffs. They've extended the deadline until who knows when.

[C]

That's really the forefront of what a lot of investors have been telling me as far as when it comes to a catalyst of what could propel the market even higher. Because as we are in this sideways move that we've seen this week, I think any sort of deal, even if it isn't completely what certain hawks are looking for, it almost seems like anything would be better than what investors are anticipating. That's clearly going to be on their radar as well as more economic indicators out there, especially housing data next week as well as employment numbers.

[B]

We do have the jobs report. We've got new home sales. But are basically investors looking for the next move, whatever that might be?

[C]

Yes, I think as long as the data remains strong and we don't have any sort of numbers come through that shows a broader trend of whether or not the economy could be slowing more than expected. I think that's still a solid sign for the economy right now. We've seen such a huge run up the past two months is the first two months since I believe it was 2013 that every sector in the S&P 500 posted back to back gains. That was really led by industrials which got hit hard along with other sectors in the fourth quarter, but those mostly due to the fact that they're exposed overseas, especially in China. And a lot of those concerns and since those of ease, it's really helped cyclical areas like that. In addition to that, energy, Wall Street

[B]

Journal markets reporter Jessica Menton. Thanks Jessica.

[C]

Thanks so much for having me.

[B]

The February jobs report due out this Friday is the economic highlight in the new week. The economy has added jobs for 100 straight months and strong job growth is expected. In this report, we'll get December data on new home sales and constructions pending, both delayed by the government shutdown. Reports are also due this week on auto sales, non manufacturing activity, consumer credit, the trade balance, productivity and private sector payrolls. And the Federal Reserve will release its latest beige book survey of regional banks on economic conditions across the country. The earnings season is essentially over with, but we will get quarterly profit numbers from retailers and they can be a good gauge of consumer demand. Among those reporting are Target, Abercrombie and Fitch, Urban Outfitters, Kroger, Costco, American Outdoor Brands, Kohl's and Burlington stores. And that's your money briefing. I'm Charlie Turner in New York for the Wall Street Journal.

[A]

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