Weekly market update
Stocks finished higher on the week even as new cases/deaths from the coronavirus soared. We have a nickname for the virus now, COVID-19 – doesn’t sound as bad as coronavirus. The Dow rose 1.17%, the S&P 500 added another 1.65% and the tech-heavy NASDAQ rose 2.23%.
We saw new record highs last week for the Dow, the S&P 500 and the NASDAQ even as COVID-19 concerns remain high, stocks just don’t seem to care – which is almost unbelievable to me. Coronavirus is the new China Trade tensions for stock market story headline writers. As I have said, one day is optimism next pessimism.
U.S. Treasury yields ended the week essentially flat, at around 1.59% – they rise when fears go up and fall when those same fears recede. We heard from FED Chair Powell last week in his semi-annual testimony before Congress where he expressed concerns that the COVID-19 could (he meant should) lead to disruptions in China that would spill over into the global economy. He reiterated that our economy was in a good place right now and that rate hikes or decreases were on hold at this time, but they are ready to react to incoming data.
On the economic front, the headline CPI came in at 2.5% YoY, slightly more than analyst expectations, but the core CPI – energy and food prices (but we all buy food and gas), held steady. Industrial production fell by 0.3% in January, largely driven by the production halt of the Boeing 737 Max, which will probably continue to drag on the sector for months to come. Retail sales were in line with expectations, rising 0.3%. Small business optimism also saw an increase in January while consumer sentiment continues to rise to a near 15-year high.
Stock and bond markets are closed in observance of President’s Day, so we’ll have a shortened trading week and we will also see only a light dose of new economic data. We will continue to monitor how the markets react to any news on COVID-19, but what’s most important is what prices are telling us and not what we “think” the markets should be doing.
Make it a great week and we are committed to keeping you posted.
Todd Day, MBA
Portfolio Manager
Horizon Financial Services, LLC
