Jobs Numbers in Focus after Strong February03-03-2015 |
Sources: Rates Data and Economic Calendar—Bloomberg Markets as of 3/2/15; Equity Market, Fixed Income and REIT returns from JP Morgan as of 2/27/15.
Jobs Numbers in Focus after Strong February
U.S. Equity markets finished February regaining the losses experienced in January and now stand firmly in positive territory for the year. The S&P 500’s 5.5% return last month was the largest February gain since 1998 and marks the 5th consecutive year the market has been positive year-to-date heading into March. Mid and small cap stocks also posted positive returns last month in-line with their large cap counterparts returning 5.0% and 5.8% respectively. Internationally, developed markets continue to make gains and have brought local investors a return of 9.3% so far in 2015, however, when those returns are converted to U.S. Dollars they fall to 6.5% due to the stronger greenback.
Investors are looking ahead to Friday’s Jobs report which will show not only changes in the unemployment rate but perhaps more importantly changes in average hourly earnings. The Federal Open Market Committee has referenced the lack of growth in wages as one of the reasons rates remain low despite the unemployment rate reading below 6% for five straight months. Currently, the consensus range on Bloomberg.com is for earnings to grow between 0.2% – 0.3% month over month after rising 0.5% in January. The market will likely continue to react to any signs of when the first Fed rate hike might occur and we expect that interest rate sensitive sectors will experience initial short term movements to the upside if jobs figures disappoint and to the downside if they exceed expectations.
As clients continue to ask us to review their portfolios we are finding that the low interest rate environment of the past six years has caused many to “reach for yield” exposing them to potentially interest rate sensitive sectors. If you would like us to complete a complimentary portfolio report for you so you understand how your investments are allocated across sectors of the market please speak with your Hennion and Walsh Financial Advisor or a member of the Hennion and Walsh Asset Management Team.
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