Weekly market update
Stocks rebounded in big fashion last week with the Dow up 1.6%, the S&P 500 2.9%, the NASDAQ 3.8% and Russell 2000 up 2.1%. Boeing was a huge drag on the Dow last week following the crash of a Boeing jet in Ethiopia last Sunday and the subsequent grounding of pretty much all 737 Max 8 and 9s.
Last week, was the best week of 2019 so far for S&P 500, it is on track for its strongest first quarter since 1998. The Best three S&P 500 industry groups YTD heading into this week—Tech, Tech and more Tech. These gains were driven by solid earnings from the semiconductor industry, solid economic data and developments in the China trade talks.
Treasury yields were flat last week as an absence of any surprises kept the market calm.
U.S. industrial production rose 0.1% in February which was below forecasts but better than the negative reading in January. The underlying weakness in the manufacturing component added concerns around a global slowdown as factory production fell 0.4%. So, there is no letup in the stalled manufacturing sector. The U.S. continues to run at two different speeds—manufacturing sluggish and service sector robust and firm.
February’s Consumer Price Index rose for the first time in four months and the wholesale cost of U.S. goods and services rose slightly in February, mostly because of higher gasoline prices, but inflation more broadly showed little threat to the economy.
January retail sales beat expectations; however, December was revised down to be even worse than originally reported.
U.S. durable-goods orders rose 0.4% in January. Orders minus transportation dipped by 0.1%. The best news in the report: business investment (core orders) rebounded 0.8% after two big declines. Biggest gain since last summer.
U.S. consumer sentiment (Univ of Michigan) bounced back to 97.8 in March, surpassing expectations, after a weak patch the past two months. It was not a surprise to see this eventually rebound once the government shutdown was over.
FED week is upon us once again, and it starts with the S&P 500 near its highest level in months and Treasury yields near their lowest. Though there’s little drama around the Fed’s meeting Tuesday and Wednesday, it’s probably going to be closely watched in what appears to be a slow news cycle.
The big question on investor’s minds is “Can the rally roll on?” Well, global central banks are about as accommodative as possible. We have declining inflation and recession fears. China is “full-on” in stimulus mode while they inch closer to a trade deal with the U.S. and Europe is sitting at 6-month highs. There are a number of positives right now—we’ll see how the week ahead plays out, so stay tuned and we’ll keep you posted.
Todd Day, MBA
Portfolio Manager
Horizon Financial Services, LLC
March 19, 2019
