The market is showing no signs of fatigue right now. News that China plans to cut in half tariffs on $75 billion worth of U.S. imports effective on Valentine’s Day got investors’ attention. This is a partial roll-back of the retaliatory tariffs from the dispute. The decision was two-fold; China is adhering to their pledge of the Phase 1 trade deal, and they want to send a message that despite the coronavirus, things will be ok.  This is good news for soybean farmers and other agriculture producers.

Communication Services sector is the leader today thanks to a bounce back in Alphabet/Google (GOOG/GOOGL) after being hit on its earnings, as well as huge increase in Twitter (TWTR) after its latest earnings, which beat on revenues, but EPS was shy of estimates.  Still TWTR is up about 17%.

While advancers are leading decliners, its close. However, new 52-week highs far outpace the lows.

Nonfarm Business Productivity and Unit Labor Cost

On the economic front, the BLS report showed a 1.4% increase in both productivity and unit labor cost in the fourth quarter for the nonfarm business sector. 

• Productivity rose due to a 2.5% increase in output, as well as a 1.1% increase in hours worked
• Unit labor costs were up in part to a 2.8% rise in compensation per hour, coupled with a 1.4% increase in productivity
• Manufacturing sector labor productivity dipped 1.2% in the fourth quarter
• Manufacturing sector unit labor costs increased 5.9%

The long-term average for productivity from 1947 to 2019 is 2.1%, so there is still room for improvement. Growth in 2019 on the other hand was the strongest since 2010, increasing 1.7%, compared to the 1.3% average for the years 2007-2019.