Stocks Bounce Back on Subdued Inflation Concerns
Sources: Sources for data in tables: Equity Market and Fixed Income returns are from JP Morgan as of 03/09/18. Rates and Economic Calendar Data from Bloomberg as of 03/12/18. International developed markets measured by the MSCI EAFE Index, emerging markets measured by the MSCI EM Index. Sector performance is measured using GICS methodology.
U.S. Stocks bounced backed last week with their second best performance of the year. The S&P 500 Index gained 3.6%, the Russell Midcap Index advanced 3.8%, and the Russell 2000, a gauge of the Nation’s smallest publicly traded companies, ended the week 4.2% higher. Internationally, developed markets gained 1.9% while emerging markets moved 2.2% higher. On the fixed income front, the yield on the 10 Year U.S. Treasury ticked 4 basis points higher to 2.90% from 2.86% a week prior.
Investor focus last week was centered on the monthly employment report for clues about the direction and pace of inflation and interest rates. In January, the employment report showed a pickup in wage growth helping to spur the sharp sell-off during which the Dow Jones Industrial Average experienced multiple days +1,000 point losses. Friday’s report was welcome by market participants from the standpoint of job gains with 313,000 workers finding jobs and much more subdued month-over-month wage growth of 0.1% versus 0.3% in January.
Despite last week’s strong jobs report, in our view it is worth monitoring developments in inflation and any potential response from the Federal Reserve. Tighter monetary conditions have historically proceeded most recessions and it is likely that relationship will continue to hold. The key to successfully navigating the next downturn will likely be developing an appropriate strategy today based on one’s own risk tolerance and goals and maintaining discipline throughout future market cycles. If you would to take the first step in process and have a financial plan completed please do not hesitate to speak with your Hennion & Walsh Financial Advisor.
Disclosures: Past performance does not guarantee future results. We have taken this information from sources that we believe to be reliable and accurate. Hennion & Walsh cannot guarantee the accuracy of said information and cannot be held liable. This information is provided for informational purposes only and is not a solicitation to buy or sell any of the asset classes or sectors discussed.
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