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February 11 – February 15 Week in Review

The stock market continued its winning ways last week spurred on by progressing U.S-China trade talks, Congress averting another government shutdown, and the Federal Reserve maintaining its dovish stance. For the week the S&P 500 gained 2.50%, the Dow Jones Industrial Average gained 3.09%, the Nasdaq Composite gained 2.39%, and the Russell 2000 was the big winner, gaining 4.17%.

10 of the 11 S&P 500 sectors finished higher last week with energy, industrials, and materials leading the advance. Conversely, the utilities sector was the lone group to finish with a loss.

The U.S. and China concluded another round of trade negotiations last week, although structural issues – forced technology transfers, enforcement oversight, and China subsidizing domestic industries – were still unresolved. Mid-level talks will continue this week in Washington while President Trump considers a possible 60-day extension to the March 1 deadline.

Also on Capitol Hill, President Trump signed a bipartisan funding resolution to avoid another government shutdown, although the $1.375 billion allotted for border security fell short of the $5.7 billion that was requested. As a result, President Trump declared a national emergency, setting up a likely legal battle, in order to secure funding from other departments to build a border wall.

The Fed, meanwhile, continued to assure investors that they need not fear tighter monetary policy at this juncture. Fed Governor Brainard in a TV interview said she thinks the balance sheet normalization effort should come to an end later this year.

All these developments served to increase investor confidence in the face of slumping retail sales data and downside corporate guidance. Strikingly, last week's gains lifted the S&P 500 above its 200-day moving average, which traders consider an important technical level, for the first time since December 4.

As for retail sales they declined 1.2% in December, the biggest monthly decline in nearly 10 years. There was a belief, however, that the December retail sales numbers were likely affected by the extreme weather that hit most of the country and would give way to better retail sales data for January.

Separately, Coca-Cola, PepsiCo, NVIDIA, Applied Materials, Activision Blizzard, and Mattel were just some of the companies last week that issued downside guidance. Cisco Systems, however, provided investors with positive results.

U.S. Treasuries retreated last week, driving yields higher and flattening the yield curve even further. The 2 year yield increased eight basis points to 2.52%, and the 10 year yield increased four basis points to 2.67%.

In other markets the U.S. Dollar Index gained 0.3% to 96.90 and WTI crude rose 5.4% to $55.56 a barrel.

February 18 – February 22 Economic Calendar

  • Monday
  • US Holiday: Presidents Day
  • Tuesday
  • Loretta Mester Speaks
    8:50 PM ET
  • Housing Market Index
    10:00 AM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • Redbook
    8:55 AM ET
  • E-Commerce Retail Sales
    10:00 AM ET
  • FOMC Minutes
    2:00 PM ET
  • Farm Prices
    3:00 PM ET
  • Thursday
  • Raphael Bostic Speaks
    7:50 AM ET
  • Durable Goods Orders
    8:30 AM ET
  • Jobless Claims
    8:30 AM ET
  • Philadelphia Fed Business Outlook Survey
    8:30 AM ET
  • PMI Composite FLASH
    9:45 AM ET
  • Exisiting Home Sales
    10:00 AM ET
  • Leading Indicators
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • EIA Petroleum Report
    11:00 AM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
    • Friday
    • John Williams Speaks
      10:15 AM ET

       

       

    • Baker-Hughes Rig Count
      1:00 PM ET
    • Richard Clarida Speaks
      1:30 PM ET
    • Patrick Harker Speaks
      1:30 PM ET
    • James Bullard Speaks
      1:30 PM ET
    • John Williams Speaks
      5:30 PM ET

PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. This commentary is a matter of opinion and is for informational purposes only. It is not intended as investment advice and does not address or account for individual investor circumstances. Investment decisions should always be made based on the client's specific financial needs, goals and objectives, time horizon and risk tolerance. The statements contained herein are based solely upon the opinions of Telemus Capital, LLC. All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice. Information was obtained from third party sources, which we believe to be reliable, but not guaranteed.

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