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January 28 – February 1 Week in Review  

The markets overcame a sluggish start to the week last week to finish on a higher note with earnings coming in better than feared and a dovish sounding Federal Reserve easing investor worry. The S&P 500 gained 1.57%, its best January since 1987, the Dow Jones Industrial Average gained 1.32%, the Nasdaq Composite gained 1.38%, and the Russell 2000 gained 1.29%.

The S&P 500 energy, real estate, consumer staples, and industrial sectors led last week's advance. On the other hand, the consumer discretionary, financials, and materials sectors underperformed.

What proved to be a real rallying cry for the market last week was the Fed. In particular, the idea that the Fed has pivoted from being a foe of the market to a friend with its monetary policy outlook sparked broad buying interest and allowed the S&P 500 to break above its 2700 level for the first time since December 7th.

Specifically, the Federal Open Market Committee and Fed Chair Powell on Wednesday indicated the Fed is content with being patient with its policy approach and is open to curtailing its balance sheet normalization effort if necessary.

Also, the FOMC voted unanimously to keep the fed funds target rate range unchanged at 2.25% to 2.50%, as expected.

Last week also saw the U.S. and China resuming trade talks in Washington and a host of corporate earnings reports that were generally mixed but were not as bad as anticipated.

Regarding earnings, Dow components Apple, Boeing, 3M, Pfizer, Exxon Mobil, Chevron, and Merck all pleased investors with their results while Caterpillar, Microsoft, Visa, DowDuPont, McDonald's, and Verizon underwhelmed.

In addition, widely owned Facebook and General Electric surged following their earnings reports, while Amazon fell on disappointing guidance although they beat their earnings estimates.

U.S. Treasuries saw increased buying interest following Wednesday's FOMC decision and Fed Chairman Powell's press conference. Treasuries pulled back on Friday, though, after a stronger than expected Employment Situation Report for January, which showed that nonfarm payrolls increased by 304,000. The 2 year yield finished the week down 11 basis points to 2.50%, and the 10 year yield fell nine basis points to 2.69%.

In other markets the U.S. Dollar Index fell 0.2% to 95.66 and WTI crude rose 3.0% to $55.28 a barrel.

February 4 – February 8 Economic Calendar

  • Monday
  • Factory Orders
    10:00 AM ET
  • TD Ameritrade IMX
    12:30 AM ET
  • Loretta Mester Speaks
    7:30 AM ET
  • Tuesday
  • Redbook
    8:55 AM ET
  • PMI Services Index
    9:45 AM ET
  • ISM Non-Mfg Index
    10:00 AM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • International Trade
    8:30 AM ET
  • Productivity and Costs
    8:30 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • 10-Yr Note Auction
    1:00 PM ET
  • Jerome Powell Speaks
    7:00 PM ET
  • Thursday
  • Jobless Claims
    8:30 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Consumer Credit
    3:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • James Bullard Speaks
    7:30 PM ET
    • Friday
    • Baker-Hughes Rig Count
      1:00 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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