Market Update: Friday, February 16, 2018

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Market Recap

  • U.S. closed higher for fifth consecutive day; up 6% from February 8 low. Return to positive economic fundamentals, waning inflation fears, corporate earnings helping. S&P 500 Index +1.2%, Dow +1.2%, Nasdaq +1.6%, Russell 2000 +1.0%.
  • Interest rate proxy utilities led sector returns; technology, consumer staples outperformed as well. Energy was the only sector lower.
  • Positive breadth on NYSE (2.3:1) on muted trading volume (~92% of 30-day avg.).
  • Treasury yields near flat. 10-yr. note yield -1 basis point (-0.01%) to 2.90%.
  • Commodities: WTI crude oil recouped some recent losses (+1.5% to $61.49/bbl.), COMEX gold (-0.2% to $1355/oz.), industrial metals higher again across the board.
  • Economic data: Domestic industrial production softer than anticipated (-0.1% month over month vs. 0.2%). Federal Reserve’s (Fed) balance sheet grew week over week; Treasury holdings lightened, but reduction was outpaced by growth in mortgage back securities.

Overnight & This Morning

  • Domestic equities open slightly higher, extending rally following previous market dip. Volatility index back below 20 after spiking to 37.3 on February 5.
  • European stocks following U.S. higher despite poor U.K. January retail sales numbers; continued loose European Central Bank monetary policy cited as a driver. STOXX Europe 600 +0.8%, DAX +0.4%, FTSE 100 +0.8%.
  • Most Asian markets closed for Lunar New Year’s holiday. Nikkei +1.2% despite ongoing yen strength; Japanese Finance Minister noted the government will act when needed to slow yen strength. Also, Bank of Japan chief Kuroda was renominated for a new five-year term.
  • China’s U.S. Treasury holdings increased last year–the most since 2010– up $126.5 billion to $1.18 trillion in December. China remains the largest non-U.S. holder.
  • Treasuries firming from yesterday’s close; 10-yr. yield -0.02% to 2.88%. Yields continue to support dollar against most major crosses.
  • Commodities: Oil lower overnight (-0.4% to ~$60.99/bbl); gold +0.1% to ~$1356/oz.; industrial metals continue positive streak.
  • Economic releases: U.S. housing starts kicked off the New Year strong; January figures beat expectations (1.326m vs. 1.232m).

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Click Here for our detailed Weekly Economic Calendar

Friday

  • Import & Export Price Index (Jan)
  • Housing Starts & Building Permits (Jan)
  • U of Mich. Sentiment (Feb)
  • China: New Loan Growth and Money Supply (Jan)

 

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