Investment Commentary –March 27th, 2018

Year to Date Market Indices as of Market Close March 27th, 2018
Dow 23,857 (-3.49%)
S&P 2,612 (-2.28%)
NASDAQ 7,008 (1.53%)
Gold $1,350 (2.72%)
OIL $64.67 (7.84%)
US 10Y Treasury 2.77 (36.18%)
Barclay Bond Aggregate (-1.98%)

Stocks end lower, led by technology rout

U.S. stocks ended sharply lower Tuesday, as a selloff in the technology sector fueled a rout that wiped out much of Monday’s sizable gains.

Recent weakness has been attributed to concerns over a potential trade war between China and the U.S. as investors assess the likelihood of any protectionist policies and the impact of any retaliatory measures from trading partners.

What are the main benchmarks doing?

The Dow Jones Industrial Average DJIA, -1.43% dropped 344.89 points, or 1.4%, to 23,857.71, with 25 of its 30 members finishing in negative territory.

The S&P 500 index SPX, -1.73% declined 45.93 points, or 1.7%, to 2,612.62, with seven of its 11 main sectors closing lower. The S&P 500 technology sector fell 3.5%, while financials and consumer discretionary ended about 2% lower. The top performers on the benchmark index were two defensive groups, utilities and telecommunications, up 1.5% and 0.5% respectively.

The Nasdaq Composite Index COMP, -2.93% meanwhile, fell 211.74 points, or 2.9%, to 7,008.81.

With two more sessions to go, the stock market is on track to post hefty monthly losses. The Dow is down 4.7% in March, and it is off 3.5% so far this year. The S&P is down 3.7% so far this month, while the Nasdaq is down 3.6% in March.

Rate outlook

With Jerome Powell leading his first U.S. Federal Reserve policy meeting, the Fed lifted short-term interest rates for the second time in less than four months, as had been expected. While board members maintained their previous outlook for two more rate hikes through the end of this year, they lifted their expectations for economic growth.

In the red for 2018

The tough week for stocks sent the S&P 500 into negative territory year to date, but the index was still slightly above its low point of February 8, when the market went into a correction. The Dow fell below 24,000 points on Friday and into negative territory for 2018. The NASDAQ remained slightly positive year to date.

Shutdown averted

After threatening a veto earlier in the day, President Trump on Friday signed a $1.3 trillion spending bill that averted a government shutdown. The measure will fund the government until October.

Upcoming events:

Wednesday: U.S. Federal Reserve Board concludes two-day policy meeting, Chairman Jerome Powell holds press conference

Other Notable Indices (YTD)

Russell 2000 (small caps) -1.43
EAFE International -2.53
EAFE Emerging Markets 1.37
Shiller Cape Annuity Index -0.25

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.