Investment Commentary –March 13th, 2018

Year to Date Market Indices as of Market Close March 13th, 2018
Dow 25,007 (0.67%)
S&P 2,765 (2.04%)
NASDAQ 7,511 (6.79%)
Gold $1,326 (1.92%)
OIL $60.86 (3.96%)
US 10Y Treasury 2.847 (47.16%)
Barclay Bond Aggregate (-2.10%)

Stocks Decline as Trump Cabinet Turmoil Deepens: Markets Wrap

U.S. equities fell for the second straight day as markets took in Tuesday’s economic and political news. The 10-year Treasury yield fell while the dollar held steady.

While an inflation report reinforced the sense that economic growth is picking up without runaway price increases, energy shares weighed on the S&P 500 Index as oil declined on concern that global demand might not absorb burgeoning U.S. supplies. Retail sales and crude inventory figures due out Wednesday may offer more clues on the future of the economy.

Meanwhile, the sudden firing of U.S. Secretary of State Rex Tillerson — to be replaced by CIA Director Mike Pompeo — may have investors waiting for more shoes to drop at the White House, especially when it comes to trade policy.

“We’ve got a new person filling the shoes of the Secretary of State,” said Mike Bailey, director of research at FBB Capital Partners in Bethesda, Maryland. “Although the new person has been around in a different office previously, investors may just be concerned about what is this new person going to do? Could the new Secretary of State be more in line with Trump? Be more inclined towards protectionism?”

Around the Web

Tariff tussle

President Trump followed through with plans to impose global tariffs on steel and aluminum imports, although Canada and Mexico are excluded and other countries could secure exemptions before the tariffs take effect. The tariffs are being implemented over the objection of the president’s top economic advisor, Gary Cohn, and he announced plans to resign.

NASDAQ record

Although the S&P 500 and the Dow still have ground to make up to return to their record levels achieved on January 26 of this year, the NASDAQ on Friday surpassed that level, setting a new high. The Russell 2000 Index, a small-cap benchmark, was less than 1% below its record, while the S&P 500 remained 3% shy of its peak and the Dow was 5% below.

Jobs bonanza

The U.S. economy generated 313,000 new jobs in February, topping economists’ expectations and marking the strongest monthly job growth in a year and a half. Wage growth was relatively modest, easing fears that inflationary pressures could be accelerating. Friday’s jobs report lifted stocks, as the Dow jumped 440 points, its biggest daily gain of the week.

Bitcoin blowout

The price of bitcoin plunged about 20% for the week, slipping below $9,000. Regulatory pressures continue to weigh on bitcoin and other cryptocurrencies, and the SEC on Wednesday said that exchanges offering trading of digital assets would need to register with the agency.

Upcoming events:

Wednesday: Producer Price Index

Other Notable Indices (YTD)

Russell 2000 (small caps) 4.47
EAFE International -2.65
EAFE Emerging Markets 5.50
Shiller Cape Annuity Index 4.93

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.