Last Monday the DOW was up nearly 400 points and then the market nose-dived until stabilizing Friday, with the S&P 500 and Nasdaq both up strongly. For the week the three major indexes were solidly down.
President Trump is strongly signaling his administration will impose tariffs on imported steel and aluminum. This sent markets tumbling and induced howling, mostly by conservatives, and cheering from mostly liberals. While President Trump campaigned on these trade policies and has spoken about for decades, many were rattled to see he’s serious.
Markets do not like uncertainty and there is great uncertainty about the policy details and the reaction of our trading partners. There will be winning industries and losing industries as there always is when our government meddles in the free market. From a money management perspective, it is interesting noise. We will see how this plays out, but it cannot be predicted. Therefore, we will not be making any portfolio recommendations based on this information. To do so would be highly speculative.
CB: PLENTY OF CONFIDENCE IN THE ECONOMY
The Conference Board’s monthly consumer confidence index soared to 130.8 in February – the highest reading seen since November 2000. In January, the gauge was at 124.3. (In the middle of the Great Recession, the index hovered near 25.)1
SOLID READINGS ON SOME KEY INDICATORS
Further fundamental economic data released last week looked strong. Personal incomes improved 0.4% in January, according to the Bureau of Economic Analysis; that matched the December increase. Personal spending advanced 0.2% last month. The Institute for Supply Management’s manufacturing purchasing manager index reached 60.8 in February, up 1.7 points from its impressive January level. Lastly, the BEA made its third, concluding estimate of Q4 GDP last week: 2.5%.2
NEW HOME SALES RETREATED 7.8% IN JANUARY
This decline occurred even as new home inventory reached a 9-year high. With mortgage rates reaching 4.4% and the median new home price up 2.5% in a month to $323,000, prospective buyers were deterred. The Census Bureau says the rate of new home purchases was down 1.0% year-over-year through January.3
MAJOR INDICES TAKE WEEKLY LOSSES
All three of Wall Street’s big benchmarks fell as February gave way to March. Losing 1.08% for the week, the Nasdaq Composite settled at 7,257.87 Friday. The S&P 500 retreated 2.04% in five days, ending the week at 2,691.25. Hit hardest, the Dow Jones Industrial Average slumped 3.05% across the week to 24,538.06.4
ISM releases its latest service sector PMI on Monday. Tuesday, earnings announcements arrive from Autodesk, H&R Block, Ross Stores, Target, and Urban Outfitters. Wednesday, the Street reviews earnings from Abercrombie & Fitch, Caesars Entertainment, Casey’s General Stores, Costco, Dollar Tree, Thor Industries, and Vivint Solar; in addition, the Federal Reserve offers a new Beige Book, and ADP provides its February payrolls snapshot. A new Challenger job-cut report comes out Thursday, along with the latest initial jobless claims figures and earnings results from Dell Technologies, Hovnanian, Global Partners, Kroger, Navistar, Stage Stores, and Verifone. Friday, investors will consider the Department of Labor’s February jobs report and Q4 results from Revlon.
|% CHANGE||YTD||1-YR CHG||5-YR AVG||10-YR AVG|
|REAL YIELD||8/11 RATE||1 YR AGO||5 YRS AGO||10 YRS AGO|
|10 YR TIPS||0.74%||0.48%||-0.67%||1.08%|
Sources: wsj.com, bigcharts.com, treasury.gov – 3/2/184,5,6,7
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS
real yield = projected return at maturity given expected inflation.
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.
1 – marketwatch.com/story/consumer-confidence-in-us-hits-highest-level-since-november-2000-2018-02-27 [2/27/18]
2 – investing.com/economic-calendar/ [3/2/18]
3 – reuters.com/article/us-usa-economy/u-s-new-home-sales-hit-5-month-low-supply-highest-since-2009-idUSKCN1GA1X9 [2/26/18]
4 – markets.wsj.com/us [3/2/18]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F2%2F17&x=0&y=0 [3/2/18]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F2%2F17&x=0&y=0 [3/2/18]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F2%2F17&x=0&y=0 [3/2/18]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F1%2F13&x=0&y=0 [3/2/18]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F1%2F13&x=0&y=0 [3/2/18]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F1%2F13&x=0&y=0 [3/2/18]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=3%2F3%2F08&x=0&y=0 [3/2/18]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=3%2F3%2F08&x=0&y=0 [3/2/18]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F3%2F08&x=0&y=0 [3/2/18]
6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [3/2/18]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [3/2/18]