Weekly Market Update, March 24, 2014
Presented by Michael Manning
General market news
- Last week’s Federal Reserve meeting and subsequent statement from Janet Yellen suggested that the Fed was feeling more optimistic about the economy, pushing yields on the 10-year Treasury from 2.65 percent to as high as 2.80 percent. Yields had settled down at around 2.76 percent early Monday morning.
- Equity markets rebounded strongly last week, with the S&P 500 reaching an all-time intraday high on Friday before sliding back to close at 1,866, with a gain of 1.38 percent.
- The Fed is making a point of letting markets know that the tapering schedule is set to wrap up in October of this year, at which time raising the federal funds rate should take over discussion. As Yellen stated last week, that could happen as soon as six months after the easing program ends. On the other hand, there have been few cases where the Fed has set a very specific agendaespecially two years in advanceand stuck to it.
- For the most part, equity markets shrugged off the news from the Fed, Crimea, and signs of international economic weakness and instead took their positive direction from better-than-expected domestic economic reports.
Equity Index | Week-to-Date % | Month-to-Date % | Year-to-Date % | 12-Month % |
S&P 500 | 1.38% | 0.49% | 1.45% | 22.43% |
Nasdaq Composite | 0.74% | -0.67% | 2.67% | 33.57% |
DJIA | 1.48% | -0.02% | -1.09% | 15.09% |
MSCI EAFE | 0.06% | -3.20% | -1.84% | 14.58% |
MSCI Emerging Markets | 0.78% | -2.05% | -5.48% | -4.20% |
Russell 2000 | 1.04% | 1.01% | 2.84% | 27.82% |
Source: Bloomberg
Fixed Income Index | Month-to-Date % | Year-to-Date % | 12-Month % |
U.S. Broad Market | -0.44% | 1.68% | -0.29% |
U.S. Treasury | -0.49% | 1.42% | -1.46% |
U.S. Mortgages | -0.48% | 1.47% | 0.28% |
Municipal Bond | -0.23% | 3.40% | -0.01% |
Source: Bloomberg
What to look forward to
This week will start off with additional housing data in the form of New Home Sales. Although sales of new homes make up a smaller percentage of overall sales, the data tends to be more forward-looking compared with existing home sales. The nationwide S&P/Case-Shiller Home Price Index is also set for release. Prices have risen by double digits since last year but have moderated somewhat recently. Nonetheless, analysts are calling for a continued rise of 0.55 percent in January relative to December.
Excluding the volatile transportation sector, Durable Goods Orders may have risen a modest 0.1 percent. Orders data has been all over the map recently and therefore hasn’t been as useful as it sometimes is.
Not much change is expected from the Consumer Confidence Index, although analysts believe that optimism will have marginally increased in March. As the weather improves after a particularly bad winter, seasonal factors could play a bigger role than usual.
Both Personal Income and Personal Spending may have risen 0.3 percent if the consensus estimate is correct. That would be a very positive sign, especially because income and spending were strong last month as well.
Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index. The Bank of America Merrill Lynch U.S. Broad Market Index tracks the performance of U.S. dollar-denominated investment-grade debt publicly issued in the U.S. domestic market, including U.S. Treasury, quasi-government, corporate, securitized, and collateralized securities. The Bank of America Merrill Lynch U.S. Treasury Index tracks the performance of U.S. dollar-denominated sovereign debt publicly issued by the U.S. government in its domestic market. The Bank of America Merrill Lynch U.S. Mortgage-Backed Securities Index tracks the performance of U.S. dollar-denominated fixed-rate and hybrid residential mortgage pass-through securities publicly issued by U.S. agencies in the U.S. domestic market. The Bank of America Merrill Lynch U.S. Municipal Securities Index tracks the performance of U.S. dollar-denominated investment-grade tax-exempt debt publicly issued by U.S. states and territories, and their political subdivisions, in the U.S. domestic market.
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Michal Manning is a financial advisor located at Manning Wealth Management 2550 5th Ave, Suite 800 San Diego, CA 92103. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 619-237-9977.
Authored by the Investment Research team at Commonwealth Financial Network.
© 2014 Commonwealth Financial Network®
