Investment Commentary – March 21st, 2017

Market Indices as of Market Close March 21st, 2017
Dow 20,668 (4.58% YTD)
S&P 2,344 (4.70% YTD)
NASDAQ 5,793 (7.63% YTD)
Gold $1,244 (7.82%)
OIL $47.50 (3.78% YTD)
US 10Y Treasury 2.419 (-2.86%)
Barclay Bond Aggregate (0.32% YTD) Our new reporting index to include broad market bond performance

U.S. stocks suffer worst drop in five months

U.S. stocks closed sharply lower Tuesday, with the S&P 500 and Dow industrials posting their biggest one-day losses since Oct. 11, 2016. Investors turned risk averse after the first hour of trading, as financials and industrials sold off sharply. The financial sector dropped 3%, while industrials fell nearly 2%. Shares of Bank of America Corp BAC, -0.35% dropped 5.8%. The S&P 500 SPX, -1.24% declined 29.45 points, or 1.2%, to 2,344.02, with 10 of the 11 main sectors closing lower. The Nasdaq Composite COMP, -1.83% which set an intraday record shortly after the open, closed down 107.70 points, or 1.8%, at 5,793.83. The Dow Jones Industrial Average DJIA, -1.14% dropped 237.85 points or 1.1%, to 20,668.01. The Russell 2000 RUT, -2.71% index of small stocks fell more than 2.5% to close at 1,349, erasing year-to-date gains.

This past week’s leaders were utilities and basic materials. The laggards include financials and healthcare.

Market moving headlines

YIELDS SPIKE: Expectations of an imminent rise in interest rates drove bond yields higher on Monday, and the yield of the 10-year U.S. Treasury bond climbed to 2.62%, the highest level since September 2014.

NO TRACTION: The price of crude oil slipped below $48 per barrel on Tuesday, the lowest level in three months, amid concern that Saudi Arabia might not uphold a commitment to reduce oil production. Tuesday’s drop capped a 10% slide in oil prices over the course of five trading sessions.

POUND POUNDED: The U.K. pound fell on Tuesday to its lowest level in two months against the U.S. dollar in response to the latest indication that the United Kingdom is about to move ahead with negotiations to exit the European Union.

SLOW SALES: American shoppers are exhibiting caution, as retail sales recorded the smallest monthly gain since last summer. The government said on Wednesday that sales rose just 0.1% in February.

On this day in 1950, Preston Tucker introduced his prototype car that had received tremendous hype and public attention. Though the car had many supporters, Tucker defaulted on the deadline and only 51 cars were built. Tucker stated that his failure was a result of a conspiracy orchestrated by the “Big Three” car manufacturers already in place in the American car market.

On tap for the rest of the week:
Thursday: New home sales, U.S. Census Bureau
Friday: Durable goods orders, U.S. Census Bureau

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.