Market Update: Wednesday, March 29, 2017


  • Stocks mixed, Brexit triggered. (10:07am ET) U.S. equities are little changed this morning as traders reassess yesterday’s rebound following a string of losses; the S&P 500 found its footing after a shaky start as investor optimism returned following upbeat consumer confidence data. All eleven sectors moved higher, with a reflation theme driving Treasury weakness that pushed financials (+1.4%), industrials (+1.1%), and materials (+1.1%) to the top, while rate-sensitive utilities (+0.1%) and telecom (+0.2%) stocks lagged. Overseas, European stocks are near flat, but off earlier lows after the U.K. formally triggered divorce proceedings from the European Union. Asian markets were mostly higher overnight amid a relatively quiet session, feeding off Tuesday’s strength in U.S. stocks. The Nikkei (+0.1%) and Hang Seng (+0.2%) rose, while the Shanghai Composite (-0.4%) fell modestly. Meanwhile, WTI crude oil ($48.54/barrel) is up ahead of U.S. supply data, COMEX gold is moving lower as the dollar strengthens, and the yield on 10-year Treasuries continues to tick lower, currently at 2.39%.


  • The sound of the starting gun. The U.K. has now formally announced its intention to leave the European Union (EU) under Article 50 of the Treaty of Rome. The two-year clock is now running for the U.K. and EU to agree on the terms of the divorce. While this seems like a long time, we point out that it has taken the U.K. nine months just to make the formal announcement. One important point that bears repeating: the default trading relationship between the EU and the U.K. is governed by the World Trade Organization, the same rules that cover the U.K.’s trade with the U.S., China, Japan, and most other countries.  At this point, the formal announcement of what has been in the works for months is hardly market-moving news. However, we continue to watch the currency markets as we believe these will be the most sensitive to fundamental underlying economic changes as a result of Brexit.
  • Consumer confidence still rising. The Conference Board’s Consumer Confidence Index rose sharply in March, accelerating to its highest level since December 2000 and handily topping consensus expectations. Both the current situation and expectations components exhibited strength, with internal data on job availability and income expectations both showing improvement. Thus far, consumer and business spending has failed to match rising confidence measures, but the potential for confidence to lead to increased economic activity continues to support our expectation of gross domestic product (GDP) growth near 2.5% in 2017.
  • April showers for stocks? After posting its longest winning streak in 30 years during February, the Dow followed it up in March with its longest losing streak since 2011, which it snapped in style with its biggest one-day gain this month. Had the Dow fallen yesterday it would have marked the longest losing streak since 1978. That may sound dramatic, but keep in mind that the 1.9% decline during the streak was the shallowest drop over an eight-day losing streak since WWII. Later today on the LPL Research blog, we will take a look at what April might have in store for the markets.


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