Market Update: Monday, February 22, 2016


  • Inflation, earnings, and oil pull market in different directions. Higher than expected consumer prices stoked concerns that the Federal Reserve Bank (Fed) could potentially justify a rate hike at some point this year. Utilities and telecom stocks fell on the news, but the energy and materials sectors led to the downside as WTI crude oil slid another 3.5%. Consumer discretionary outperformed despite weakness in the retail space, while technology shares helped the Nasdaq Meanwhile, 10-year Treasury yields ticked up a 0.01% to 1.75%; COMEX gold and the dollar fell. Final tallies: Dow -21.44 at 16391.85, Nasdaq +16.89 at 4504.36, S&P 500 -0.05 (0.0%) at 1917.71.
  • U.S. stocks look to open strong. Global stocks are mostly higher overnight and U.S. futures are pointing to a strong open following their best week of the year. Oil is providing some support, with futures up close to 4% pre-market, but other catalysts are murky. China saw some buying after reshuffling its senior market regulator, while disappointing preliminary February Purchasing Managers’ Index (PMI) data for the Eurozone and Japan may be providing support on the prospect of continuing friendly central bank policy. The dollar is strengthening, helped by a falling British pound as Brexit fears rise, while the overall risk-on sentiment is pushing Treasury yields higher and gold lower.


  • Best week of the year. The S&P 500 had its best week of the year last week, gaining 2.8% (not bad considering it was only a four day week). This was the best weekly gain since the week before Thanksgiving. On Friday, the S&P 500 lost only 0.05 points, making it the smallest daily move in more than 16 months. Even though Friday didn’t show it, volatility continues to rule in 2016; out of the first seven weeks this year, only one week failed to move at least 1% (higher or lower). The gains last week happened early in the week though, as Thursday and Friday trading was muted. In fact, there wasn’t a 1% move (up or down) on either Thursday or Friday. The last time the S&P 500 went three consecutive days without a 1% move was early December.
  • Nine months without a new high. The S&P 500 last closed at a new all-time high on May 21, 2015, nine months ago. This comes out to 188 trading days without a new high. From late March 2013 until the last new high in May 2015, the S&P 500 never went more than 40 trading days without a new all-time high. Of course, there was a 25-year streak without a new high from 1929 to 1954, so the current nine-month break may not be so bad.
  • Next phase for Europe. On Friday, the European Council agreed to accept renegotiated terms for British membership in the European Union (EU). This is considered a victory for the government of U.K. Prime Minister David Cameron, which has announced a referendum on whether the U.K. should remain a member of the EU. Currently, opinion polls suggest that the British public is split fairly evenly on this issue. However, the “pro-EU” forces, including Prime Minister Cameron himself, have been silent in the public discussion. Now that the European Council has voted, the public debate will be more balanced.



  • ECB’s Draghi Speech in Brussels
  • China: Imports and Exports (Jan)



  • Housing Starts and Building Permits (Jan)
  • FOMC Minutes
  • UK: Jobless Claims and Unemployment Rate (Jan)
  • China: CPI (Jan)


  • Philadelphia Fed Mfg. Index (Feb)
  • Leading Indicators (Jan)
  • Williams (Dove)
  • EU Leaders Summit


  • CPI (Jan)
  • EU Leaders Summit 


  • Japan: Nikkei Japan Mfg. PMI (Feb)


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