Market Update: Wednesday, March 14, 2018


Market Recap

  • U.S. markets closed lower despite early advance; news from Washington, D.C. shifting trade focus to China outweighed in-line core CPI report. S&P 500 Index -0.6%, Nasdaq -1.0%, Dow -0.7%, Russell 2000 -0.6%.
  • REITs (+0.3%), utilities (+0.2%) continued to benefit from interest rate decline, which weighted on financials (-0.5%); technology (-1.2%) also lagged on valuation concerns.
  • Negative breadth on NYSE (1.5:1); trading volume below average (~87% of 30-day avg.).
  • Treasuries strengthened; 10-yr. note yield -3 basis points to 2.84%.
  • Commodities: WTI crude oil -1.2% to $60.64/bbl.; COMEX gold higher to $1325/oz.; industrial metals all higher; U.S. dollar weakened vs. most major crosses.
  • Economic data: Domestic core CPI reading met expectations (0.2%), helping to abate worries of accelerating inflation.

Overnight & This Morning

  • U.S. equities opened higher despite a lackluster retail sales report; anxiety over potential retaliatory trade measures against China due to intellectual property theft.
  • European stocks mostly up midday. U.K. response to possible Russian chemical attack a focus. STOXX Europe 600 +0.3%, DAX +0.3%, CAC 40 +0.3%, FTSE 100 +0.3%.
  • Asian markets broadly lower; positive economic data overshadowed by increasing trade risk. Nikkei -0.9%, Shanghai Composite -0.6%, Hang Seng -0.5%.
  • Treasury yields up slightly; 10-yr. yield +1 basis point to 2.85%.
  • Commodities: Oil retracing yesterday’s decline (+0.8% to ~$61.19/bbl.), gold higher to ~$1327/oz., industrial metals higher.
  • Economic releases: Chinese fixed asset investment, industrial production year-over-year numbers both beat (details below). U.S. retail sales missed (details below). Domestic Producer Price Index in line (0.2% m/m), but topped estimates year over year (2.8% vs. 2.7%).


Macro Notes

  • Retail sales fell in still-noisy February. U.S. retail sales fell 0.1% month over month in February, short of consensus (+0.3%) and in line with the revised January figure (-0.1%). Headline retail sales were weighed down by a drop in auto sales but supported by strength at building supply retailers. “Control group” retail sales, excluding autos, gas stations, building materials, and food services, rose 0.1%, short of consensus estimates (+0.4%), but up from unchanged the prior month. Excluding gas and autos only, sales rose 0.3%, matching forecasts and up nicely from January (-0.2%). Although this data may not drive consumer spending expectations higher, and spending will likely decelerate in the first quarter after a strong finish to 2017, improving growth in non-auto components, individual tax cuts, a positive wealth effect, and steady job gains are all supportive of consumer spending.
  • China releases string of upbeat data. China’s economy looks to be on firm footing, with strong export demand spurring increases in industrial production (+7.2%) and fixed asset investment (+7.9%) over the first two months of the year; both topping prior readings and consensus estimates. Also, retail sales remained strong, growing 9.7% year over year. While the data suggest China’s estimated 6.5% target growth for gross domestic product is certainly attainable, the 44.5% surge in exports, distorted by the Lunar New Year, is unlikely to be sustained, particularly as President Trump seeks to impose fresh tariffs on the United State’s third largest trade partner.
  • Is the Nasdaq finally at new highs? The Nasdaq has had a great year, up nearly 9%. The issue is the strong performance has many saying tech and the Nasdaq are potentially in bubbles. Here’s the catch, if you adjust for inflation, the Nasdaq only recently surpassed the record set in 2000. Maybe it isn’t as extended as many claim? Today on the LPL Research blog we take a closer look at this development.


Click Here for our detailed Weekly Economic Calendar


  • MBA Mortgage Applications (Mar 9)
  • PPI (Feb)
  • Business Inventories (Jan)
  • Retail Sales (Feb)
  • Germany: CPI (Feb)
  • Italy: Retail Sales (Jan)
  • Eurozone: Industrial Production (Jan)
  • Eurozone: Employment (Q4)
  • New Zealand: GDP (Q4)
  • ECB: Draghi
  • Bank of France: Villeroy



  • Housing Starts & Building Permits (Feb)
  • Industrial Production & Capacity Utilization (Feb)
  • Jolts Jobs Openings (Jan)
  • U. of Mich. Sentiment (Mar)
  • Italy: CPI (Feb)
  • Eurozone: CPI (Feb)
  • Eurozone: Labor Costs (Q4)
  • Japan: Industrial Production & Capacity Utilization (Jan)
  • China: New Loan Growth & Money Supply (Feb)

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