Oil Gains as Stocks Fall Across the Board05-05-2015 |
Oil Gains as Stocks Fall Across the Board
West Texas Intermediate Crude Oil (WTI) gained 3.5% last week as stocks around the world mostly fell in value while yields rose. The S&P 500 Index lost -0.4%, the S&P 400 Mid Cap Index lost -1.3%, and the Russell 2000 Index declined -3.1% matching the small cap index’s largest weekly loss since October 2014. Facing a weaker Dollar/stronger Euro, European stocks as measured by the Euro Stoxx 50 Index lost -2.7%. The dollar has now fallen 6 of the last 7 weeks relative to the Euro and currently is trading for $1.1135, the weakest it has been since February. On the Fixed Income front, yields on the 10 Year U.S. Treasury rose above 2% and at the time of this writing are trading for 2.16%.
The capital market reactions discussed above seem to be in part a reflection of two important economic releases Wednesday. First, a weaker than anticipated GDP release showed the U.S. economy grew at a meager 0.2% in the first quarter of 2015. Secondly, the FOMC meeting announcement recognized the slowdown in economic activity while keeping the possibility of a June rate hike on the table by not explicitly stating it was unlikely at their next meeting, as it did in March.
On a positive note, housing numbers continue to show improvement. Pending home sales increased 11.1% year-over-year (y-o-y) in March, marking the 7th consecutive month of y-o-y growth. This follows an earlier release that showed existing home sales prices also increased in March by 6.1% y-o-y, the 6th consecutive month of y-o-y gains in this measure. Wells Fargo’s Chairman and CEO, John Stumpf is optimistic on the U.S. Market and in an interview with CNBC notes “ The housing market and demand for home loans are going to be better…” while cautioning “…although it won’t be a ‘boom’ time because of a few factors standing in the way.”
We at Hennion and Walsh believe the economic tides that move the capital markets are flowing stronger and in a more unpredictable manner. While we do not suggest investors make rash decisions jumping into and out of asset classes, we strongly encourage they understand how the many moving parts of the financial system can affect your portfolio and make tactical changes when necessary. If you would like us to review your portfolio to help you understand the risks you may be facing please don’t hesitate speaking with your Hennion and Walsh Financial Advisor or a member of the Hennion and Walsh Asset Management Team.
Sources: Rates Data and Economic Calendar—Bloomberg Markets as of 5/11/15; Equity Market, Fixed Income and REIT returns from JP Morgan as of 5/08/15.
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