Investment Commentary –February 20th, 2018

Year to Date Market Indices as of Market Close February 20th, 2018
Dow 24,964 (-0.99%)
S&P 2,716 (-1.60%)
NASDAQ 7,234 (4.79%)
Gold $1,332 1.76%)
OIL $61.77 (2.71%)
US 10Y Treasury 2.891 (41.84%)
Barclay Bond Aggregate (-2.20%)

Dow slips back below 25,000 as losses accelerate

U.S. stocks threatened to snap a six-day winning streak Tuesday with the Dow falling under the 25,000 mark as the stock market’s losses accelerated in the afternoon.

Market participants continued to watch a rising dollar and climbing bond yields, both of which could make equities less attractive at current levels, even as macroeconomic conditions and corporate earnings are still seen as strong.

What are the main benchmarks doing?

The Dow Jones Industrial Average DJIA, -1.01% fell 222 points, or 0.9%, to 24,997. The S&P 500 SPX, -0.58% was off 11 points, or 0.4%, to 2,720 and the Nasdaq Composite Index COMP, -0.07% fell 13 points, or 0.2%, to 7,226.

Last week, the Dow and S&P 500 each gained 4.3%, while the Nasdaq leapt 5.3%, with all three gauges snapping a two-week losing streak. The Dow’s weekly advance was its largest since November 2016, while the S&P’s was its best since January 2013. The Nasdaq posted its biggest one-week gain since December 2011.

Around the web

Inflation watch

Although a report released Wednesday showed an uptick in inflation, stocks posted a solid performance, with the Dow gaining 253 points for the day. Consumer prices increased 0.5% in January, up from a seasonally adjusted 0.2% in December. On a 12-month basis, prices were up 2.1% through January.

Yields peak

The yield of the 10-year U.S. Treasury Bond rose on Wednesday to as high as 2.91%, the highest level in 4 years. However, for the week, the increase in the yield was modest, and it wasn’t nearly as steep as it had been 2 weeks earlier, when concerns about rising yields helped to trigger a sell-off in stocks.

Global rebound

Although many overseas stock indexes didn’t post weekly gains as big as those in the U.S. market, the gains were nevertheless impressive. A European index climbed more than 3% for the week and a Japanese index added nearly 2%.

Moving target

Stocks regained much of the ground lost during the market correction that sent the major indexes down more than 10% from their record-high levels of January 26. Stocks finished the week around 6% above the low point they reached on February 8, and the indexes are now positive year to date.

Upcoming events:

The Conference Board Leading Economic Index for the U.S.

Past week’s winners: Technology, Financials, and Industrials
Past week’s laggards: Basic materials


Other Notable Indices (YTD)

Russell 2000 (small caps) -0.25
EAFE International 0.86
EAFE Emerging Markets 3.11
Shiller Cape Annuity Index 2.21

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.……………