For the market week ended Friday, February 15,2019
- US Equity markets were up for the 7th time in the past 8 weeks last week, with investors enthused by progress in US-China trade talks, the aversion of another government shutdown, and continued support from the Fed. President Trump is considering a 60-day extension to his March 1 deadline on tariff increases on Chinese goods amidst ongoing talks between the US and China. At the same time, some Fed governors spoke last week, reinforcing the view that the Fed will be patient with any future rate increases. As a result, the S&P 500 rose by 2.5% for the week to bring gains for the year to 10.7%. The Nasdaq increased 2.4% for the week and is now up 12.6% for the year, while the Russell 2000 (small-cap stocks) rallied 4.2% for the week to bring gains for the year to 16.4%.
- Global equity markets improved last week thanks to a growing sentiment that European leaders will engage in some type of stimulus to improve the region's growth prospects. For the week, Developed Markets rose 1.9% to bring gains for the year up to 7.6%. Emerging Markets fell 0.5% for the week thanks to a rising US Dollar. For the year, Emerging Markets are up 6.7%.
- US economic data last week suggest increasing cross currents. Retail Sales ex autos for December dropped a surprising 1.8% for the month, while measures of US consumer sentiment have started to improve and remain near multi-year highs. Measures of inflation remain well in check, with the Consumer Price Index (CPI) flat in January, bringing the year-over-year increase in consumer prices to 1.6%, its lowest level since July 2017.
Of Interest to Us...
- The recent issues in Washington may be starting to impact business confidence. The NFIB Small Business Optimism index, which tracks confidence among small business owners, fell in January for the fifth consecutive month and is now at its lowest level since the late 2016. The index remains well above its historical average, and owners continue to hire and invest, but could the steady decline in optimism be a precursor to problems ahead, or will the recent resolution of issues in Washington, DC result in improved optimism?