Market Update: Friday, March 3, 2017

MarketUpdate_header

  • Markets pause ahead of Yellen speech. (9:52am ET) The S&P 500 is trading marginally lower this morning as market participants await speeches from Federal Reserve Bank (Fed) Chair Yellen and Vice Chair Fischer that could signal the direction of the mid-March FOMC meeting; market expectations of a rate hike at the meeting have risen sharply this week to around 80%. Today’s caution follows a pullback Thursday in which the S&P shed 0.6%; nine of 11 sectors lost ground. The financials sector (-1.5%) was particularly weak, although it has been the best-performing sector over the last month. Utilities (+0.7%) and telecom (+0.1%) performed best in the risk-off environment. Overseas, Asian markets (Nikkei -0.5%, Shanghai Composite -0.4%, Hang Seng -0.7%) followed the U.S. lower. European exchanges are mixed in afternoon trading with weakness in Germany offset by strength in France and Italy. Meanwhile, WTI crude oil ($52.88/barrel) has clawed back a portion of yesterday’s 2.3% slide, COMEX gold ($1228/oz.) is falling, and the yield on the 10-year note is at 2.49% after a large increase this week.

MacroView_header

  • Brexit, EU summit, China forecasts, Fed “quiet period”, and February jobs report highlight week ahead. Other than the February employment report (due out next Friday, March 10)  it’s a relatively quiet week for U.S. economic data. It’s also the unofficial quiet period for the Fed ahead of the March 14-15 FOMC meeting. The overseas calendar is chock full of potentially market-moving events, including the EU leaders summit, a potential House of Lords vote on Brexit, the European Central Bank meeting, and China’s National People’s Congress, where Premier Li will provide government targets for the Chinese economy in 2017.
  • Six in a row? The S&P 500 is up 0.6% for the week, which would be the first six-week win streak since late 2015. In fact, this would be the fourteenth six-week win streak since the March 2009 S&P 500 lows. Looking at the previous 13 times this occurred, the S&P 500 was higher on average by 0.8% a month later and positive in nine of the 13 instances.
  • The second worst day of the year. The S&P 500 closed down 0.59% yesterday, which might not sound like a lot, but it was actually the second worst session of the year. Only the 0.60% loss on January 30 was worse. This puts in perspective how persistent the rally has been, as there has been no downside volatility. In fact, today could be the ninety-eighth consecutive day without a 1% close lower for the S&P 500 – the longest such streak since 105 in 1995.

MonitoringWeek_header

Click Here for our detailed Weekly Economic Calendar

Friday

  • ISM Non Mfg. (Feb)
  • Yellen (Dove)
  • Fischer (Dove)

Saturday

Sunday

  • China: National People’s Congress Meeting Begins in Beijing

 

Important Disclosures

Past performance is no guarantee of future results.

The economic forecasts set forth in the presentation may not develop as predicted.

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

Stock investing involves risk including loss of principal.

Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, political risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks.

Treasury Inflation-Protected Securities (TIPS) are subject to interest rate risk and opportunity risk. If interest rates rise, the value of your bond on the secondary market will likely fall. In periods of no or low inflation, other investments, including other Treasury bonds, may perform better.

Bank loans are loans issued by below investment-grade companies for short-term funding purposes with higher yield than short-term debt and involve risk.

Because of its narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.

Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments.

Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.

Investing in foreign and emerging markets debt securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical and regulatory risk, and risk associated with varying settlement standards.

High-yield/junk bonds are not investment-grade securities, involve substantial risks, and generally should be part of the diversified portfolio of sophisticated investors.

Municipal bonds are subject to availability, price, and to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rate rise. Interest income may be subject to the alternative minimum tax. Federally tax-free but other state and local taxes may apply.

Investing in real estate/REITs involves special risks such as potential illiquidity and may not be suitable for all investors. There is no assurance that the investment objectives of this program will be attained.

Currency risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged.

This research material has been prepared by LPL Financial LLC.

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.

Not FDIC/NCUA Insured | Not Bank/Credit Union Guaranteed | May Lose Value | Not Guaranteed by any Government Agency | Not a Bank/Credit Union Deposit

Securities and Advisory services offered through LPL Financial LLC, a Registered Investment Advisor

Member FINRA/SIPC
Tracking #1-587318