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February 16, 2018 Weekly Market Recap

The equity market bounced back this week, reclaiming about half of the losses it registered over the previous two weeks. The tech-heavy Nasdaq climbed 5.3% as technology shares outperformed, while the S&P 500 and the Dow Jones added 4.3% apiece. The S&P 500 and the Dow ended Friday on a six-session winning streak.

February 16, 2018 Weekly Market RecapThis week’s gains put the major indices back into the green for the year, and back above their respective 50-day simple moving averages. They’re still a ways below record territory, however, settling Friday about 5.0% beneath the record highs they posted on January 26.

11 of 11 S&P 500 sectors finished the week in positive territory, with gains ranging between 1.8% and 5.8%. The top-weighted technology group (+5.8%) was the strongest sector, while the energy (+1.9%), utilities (+2.9%), telecom services (+2.4%), and real estate (+1.8%) groups were the weakest.

Within the tech group, Apple (AAPL), surged 10.2% this week, reclaiming most of the 13.5% it lost between January 18 and February 8, and Cisco Systems (CSCO) rallied 4.7% on Thursday, after reporting better-than-expected profits for the quarter ending in January and raising its earnings and revenue guidance.

Investors received a big batch of economic data this week, highlighted by a hotter-than-expected CPI reading: the Consumer Price Index increased 0.5% month over month in January and the core CPI, which excludes food and energy, rose by 0.3%. The headline month-over-month figures sparked a knee-jerk reaction from the market, which has been fighting fears of inflation – and, in turn, fears of a more hawkish Fed – in recent weeks.

However, the year-over-year figures helped restore order and keep the week’s upward trajectory intact, showing that both the CPI and the core CPI are still within a range they’ve held to for some time; the total CPI is up 2.1% year-over-year and has been between 2.0% and 2.2% for five months, while the core CPI is up 1.8% year-over-year and has been between 1.7% and 1.9% for ten months.

The yield on the benchmark 10-yr Treasury note climbed to a four-year high on Wednesday following the CPI release, closing at 2.91%, but gave up some ground on Thursday and Friday to finish the week little changed at 2.88%.

In Washington, the White House released its infrastructure plan on Monday, which is designed to stimulate $1.5 trillion in spending over a decade.

Source: Briefing Investor

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Mike Minter
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Shareholder | Chief Investment Officer

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