Market Recap for the week ending 3.15.19
-Darren Leavitt, CFA
It was an extremely busy week for the markets. Central bank news, corporate headlines, trade negotiations, technical variables, and a full dose of economic data were in play last week. The market shrugged off the prior week’s losses and had an impressive move higher. The S&P 500 gained 2.9%, the Dow increased 1.6%, the NASDAQ outperformed and was up 3.8%, while the Russell 2000 notched a 2.1% gain for the week. The long end of the curve outperformed the front end. The 2-year closed unchanged for the week at 2.44% while the 10-year yield declined by 4 basis points to close at 2.59%. Gold was off slightly for the week closing down roughly 4 bucks to 1295/oz. Oil gained just over 2 dollars and closed at 58.39 per barrel. There were no changes to our models last week.
The week started with a buy the dip mentality after the prior week’s five-day sell-off. Investors seemed encouraged Monday morning by a 60 Minutes interview of Fed President, J Powell, where he reiterated a patient stance and strengthened the notion of the “Fed Put” for the market. Later in the week, officials within the Chinese central bank expressed expanding their use of monetary policy to stimulate their economy. Additionally, the Bank of Japan met last week and as expected did nothing to its policy rate. The BOJ did express concerns on the slowdown in overseas economies and the impact it has had on their exports and production. The dovish tone out of central bankers last week certainly helped the market rally.
There was a ton of corporate news last week. The headliner had to be Boeing which was atop the headlines in most every session last week. Of note, and encouraging for bulls too was the fact that markets were able to rally in the face of an influential component like BA selling off significantly. Upgrades by the street for influential components like Apple and Facebook along with a major M&A deal from Nvidia also helped fuel last week’s gains. Investors applauded Broadcom’s earnings announcement which helped the Semiconductor’s, which have just been on fire.
Trade drama continued with Brexit votes stealing headlines throughout the week. In the end, it appears that the UK will seek more time from the EU to carve out an exit agreement. Essentially kicking the can down the road for a couple more months. US/China negotiation news flip-flopped through the week but showed “concrete progress” on Friday.
Perhaps the most influential variable in last week’s market action was the move up and over 2800 for the S&P 500. It has been a key area of resistance with 2813 and 2818 also being widely followed. The break above these thresholds is impressive and certainly could be a sign of more strength. The market set a new intraday high for the year at just over 2828 coincidentally the VIX fell to its lowest level of the year to levels not seen since October of 2018.
Economic data continued to show signs of weakness in manufacturing. The Empire State Manufacturing Survey came in at 3.7 versus an expectation of 10. Industrial production data also missed the mark coming in at 0.1% versus an expected increase of 0.4%. New home sales were also a bit of a disappointment and hindered the home builders last week. New home sales declined 6.9% on a month over month basis and decreased 4.1% on a year over year basis. On a brighter note, a preliminary read of the University of Michigan Consumer Sentiment was better than expected, coming in at 97.8 versus the consensus estimate of 94.9.
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