Investment Commentary –February 13th, 2018

Year to Date Market Indices as of Market Close February 13th, 2018
Dow 24,640 (-0.24%)
S&P 2,663 (-0.47%)
NASDAQ 7,014 (1.14%)
Gold $1,332 1.69%)
OIL $63.92 (6.75%)
US 10Y Treasury 2.829 (41.84%)
Barclay Bond Aggregate (-2.03%)

Dow logs 3rd gain in a row ahead of key inflation report

U.S. stocks on Tuesday finished in the green, marking a third consecutive gain for equity gauges, ahead of a key inflation reading, even as shades of last week’s brutal selling lingered.
What are main benchmarks doing?

The Dow Jones Industrial Average DJIA, +0.16% rose 39.18 points, or 0.2%, to 24,640.45, supported by a rise in shares of Goldman Sachs Group Inc. GS, +0.94% and Caterpillar Inc. CAT, +1.10% while a decline in United Technologies Corp.’s stock UTX, -1.26% represented the biggest drag on blue chips.

The S&P 500 index SPX, +0.26% added 6.94 points, or 0.3%, to 2,662.94, with the consumer staples and the real-estate sectors supporting the broad-market benchmark’s climb.
The Nasdaq Composite Index COMP, +0.45% meanwhile, rose 31.55 points to 7,013.51, an advance of about 0.5%.

Despite the multisession rally, the S&P 500 and the Dow remain more than 7% below record levels, hit late January, after massive declines that took hold in earnest last week. Less than halfway through February, the market has already matched the number of 1% moves seen over all of 2017. The Nasdaq is about 6.6% shy of its January all-time high

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Correction time

On the heels of the previous week’s drop of around 4%, U.S. stock indexes recorded an even steeper decline. The S&P 500 and the Dow fell more than 5%, erasing their previous year-to-date gains and then some, leaving the indexes near their levels of more than two months ago. The sell-off marked the first correction—a decline of 10% or more—since February 2016.

CPI ahead

A Consumer Price Index report scheduled to be released on Wednesday could move markets. CPI is the most common measure of inflation, and rising prices and wages have contributed to market volatility, in part due to concerns that the U.S. Federal Reserve could accelerate the pace of interest-rate increases.

Global slump

The turmoil in the U.S. stock market extended overseas. A key European index declined more than 6% for the week to its lowest level since last August. Some Asian markets joined the U.S. in a correction, with declines of at least 10% from levels reached in late January. Following the U.S. market’s big decline on Thursday, a Chinese index plunged more than 4% on Friday.

Upcoming events: Wednesday

Consumer Price Index, U.S. Bureau of Labor Statistics

Past week’s winners: Utilities

Past week’s worst laggards: Basic Materials, Technology and Healthcare

Other Notable Indices (YTD)

Russell 2000 (small caps) -2.56
EAFE International -1.72
EAFE Emerging Markets 0.52

The views presented are not intended to be relied on as a forecast, research or investment advice and are the opinions of the sources cited and are subject to change based on subsequent developments. They are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investments.