March 1, 2019 Weekly Market Recap

March came in like a lion today, with all the major indices advancing. The S&P 500 increased 0.4% this week, extending its yearly gain to 11.8%, as shares of financial and technology companies outperformed. There was a lot of news for the market to digest, which included economic data, U.S-China trade updates, and geopolitics.

The Nasdaq Composite rose 0.9%. The Dow Jones Industrial Average and the Russell 2000, meanwhile, finished flat for the week.

The S&P 500 financials (+0.8%), information technology (+1.0%), and energy (+1.1%) sectors outperformed the broader market. Conversely, the materials (-1.6%), real estate (-1.2%), and consumer staples (-0.4%) sectors underperformed.

Several key economic indicators helped tame buying interest this week, though.

December housing starts increased at the slowest pace since September 2016; the advance estimate of Q4 GDP increased 2.6%, but was still below the growth registered in the second and third quarters; and the ISM Manufacturing Index for February decreased to 54.2, from January’s reading of 56.6.

The positive news for investors, though, is that consumer confidence increased in February; moreover, the softer data could reinforce the Fed’s “patient” stance on monetary policy.

Fed Chair Jerome Powell upheld that view in his semi-annual Congressional testimony on the economy this week. He also acknowledged the Fed is close to agreeing on a plan to end the balance sheet runoff.

In U.S-China trade news, President Trump officially delayed the March 1 deadline, as was anticipated, due to reported progress being made. Bloomberg reported Friday that the U.S. and China are in the process of preparing a document that lays out the provisions of a trade deal that could be signed perhaps as early as mid-March.

There were also some geopolitical developments that garnered some attention. President Trump abruptly ended a two-day summit with North Korean leader Kim Jong-un, unable to reach an agreement on the denuclearization effort. Separately, Pakistan shot down two Indian fighter jets over their contested border but returned a captured Indian pilot in goodwill.

On the earnings front, retailers had a pretty good showing. The SPDR S&P Retail ETF (XRT) increased 2.3% this week.

U.S. Treasuries declined noticeably this week, sending yields higher across the curve. The 2-yr yield increased seven basis points to 2.55%, and the 10-yr yield increased 10 basis points to 2.76%. The U.S. Dollar Index lost 0.1% 96.46. WTI crude lost 2.5% to $55.81/bbl.

Source: Briefing Investor