Investment Commentary –February 27th, 2018
Year to Date Market Indices as of Market Close February 27th, 2018
Dow 25,410 (2.79%)
S&P 2,744 (2.64%)
NASDAQ 7,330 (6.18%)
Gold $1,319 (0.72%)
OIL $62.76 (4.43%)
US 10Y Treasury 2.891 (48.88%)
Barclay Bond Aggregate (-2.06%)
Stocks, Treasuries Sink on Hawkish Powell Remarks: Markets Wrap
U.S. stocks sold off for the first time in three sessions and Treasuries slumped as investors weighed the potential for added interest rate hikes this year following Federal Reserve Chairman Jerome Powell’s assessment that the economy is strengthening and inflation could be gaining speed. The dollar advanced.
All major equity gauges finished lower. Shares of media companies led the way down following Comcast’s $31 billion proposal to buy Sky Plc, which could set off a bidding war with Walt Disney Co. and 21st Century Fox Inc. Automakers and real estate developers also struggled.
Powell’s testimony raised the possibility that the Fed could rethink its plan for three interest rate hikes this year and potentially add a fourth. The 10-year Treasury yield initially spiked on Powell’s seemingly hawkish tone before drifting back below 2.9 percent.
Around the web
With 90% of S&P 500 companies having reported fourth-quarter results, it’s looking like another strong earnings season. On average, earnings per share climbed nearly 15% from the same quarter a year earlier, while revenue growth rose 8%, according to FactSet.
A monthly report showed that the U.S. economy continues to strengthen. The Conference Board Leading Economic Index for the U.S. showed eight of ten economic measures moved in a positive direction in January, up from seven that were positive in December.
This Day in Economic History
Glass-Steagall Act Passed
The Glass-Steagall Act was passed in response to the shortages in gold, because people were stockpiling it to get through the Depression. Foreign governments were also pulling out of the gold standard. The Glass-Steagall Act was designed to give more power to the Federal Reserve Board, allowing them to extend credit, and let them release some of the governments gold to businesses.
Fourth-quarter GDP, second estimate.
Federal Reserve Chair Jerome Powell testifies to Senate Banking Committee
Personal income and consumer spending, U.S. Bureau of Economic Analysis
Other Notable Indices (YTD)
Russell 2000 (small caps) 0.06
EAFE International 1.47
EAFE Emerging Markets 5.41
Shiller Cape Annuity Index 4.34
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.