 The Market Sum | Insight after the bell
By Caleb Silver, Editor in Chief
Tuesday's Headlines 1. U.S. markets rally to new record highs 4. Small caps join the rally, at last Markets Closed
 Markets Today U.S. markets rolled to new record highs today, although the gains were less robust than yesterday. It was a tale of two markets for retailers as Best Buy reported better than expected results for the past quarter and an optimistic outlook for the rest of the year. Dollar Tree, on the other hand, reported weaker results and an even weaker forecast for the remainder of the year. Tariffs might be to blame since much of Dollar Tree's inventory is sourced from China.
Headlines
 chart courtesy YCHARTS
Consumer Confidence Dips Again Consumer confidence dipped again in November after falling in October, according to The Conference Board's survey of consumers. While current confidence is low, expectations for December and early 2020 remain high. Lynn Franco, Senior Director of Economic Indicators at The Conference Board, said, "The decline in the Present Situation Index suggests that economic growth in the final quarter of 2019 will remain weak. However, consumers' short-term expectations improved modestly, and growth in early 2020 is likely to remain at around 2 percent. Overall, confidence levels are still high and should support solid spending during this holiday season."
That should come as a relief to retailers who count on the final month of the year to pad their profits or reduce their losses. As we can see by the chart above of the XRT ETF, which tracks retailers large and small, the sector has been underperforming the broader market all year.  chart courtesy LPL Financial
Small Caps Join the Party There had been something missing from the recent record-breaking rallies, and it was kind of disturbing. Small cap stocks have been lagging the broader market all year, which is a sign that the rallies have been driven by just a handful of large cap stocks like Apple, Microsoft, and Facebook. That lack of participation makes some investors wonder about the 'breadth' of the rallies and, by extension, the overall health of the market. In fact, only about 6.4% of listed stocks on the NYSE (there are over 2300), broke out to 52-week highs today.
Well, you can put that concern to bed as the Russell 2000, which is made up of 2000 smaller stocks with an average market cap of around $2.5 billion, broke out to a 52-week high yesterday. As Ryan Detrick, Senior Strategist at LPL Financial puts it, "Participation is the key to any lasting bull market, and this is another great sign as we head into 2020." As you can see from the chart above, when small caps finally reach new highs, they tend to stay high for the next 6-12 months.
Corrections... Yesterday I incorrectly stated that the President of Brazil is serving a six year term. It's a four year term and President Bolsanaro is in his first year in office.
I also wrote that the USMCA Agreement has yet to be signed. I was wrong. It was signed on 11/30/18, but has yet to be ratified by Congress. It's an important distinction, and we are grateful that we have smart readers who keep us in check.
chart courtesy YCHARTS  Electronics retailer Best Buy rose 9.9% today after it smashed both top and bottom line expectations today, and raised fiscal 2020 guidance to boot. Clothing maker Under Armour rose 5.1% today, while Chipotle Mexican Grill rose 3.7%.  Discount retailer Dollar Tree dropped its guidance and registered an earnings miss, prompting a 15.7% drop in its stock. The company said increased costs from the trade war was a major cause. IT firm Hewlett Packard Enterprise fell 8.5% today after it suffered a bad top-line miss. Word of the Day Environmental, Social, and Governance (ESG) Criteria  Image Source: (JOHANNES EISELE / Getty Images)
Today in History November 26, 1990 Today in 1990 the Shanghai Stock Exchange was re-established after being closed in November 1950. Originally founded in 1891 as the "Shanghai Stock and Sharebrokers Association," it was the largest equity market in Asia until the Communist Revolution of 1949. China was the second socialist country to create a national stock exchange after Hungary, and the exchange officially reopened for business on December 19, 1990. The exchange launched its first stock index the next year.
Source: https://www.goldmansachs.com/our-firm/history/moments/1990-shanghai-stock-exchange-reopens.html
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Tuesday, November 26, 2019
Consequences
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