February 25, 2019

The Week on Wall Street

Stocks rallied last week as optimism about a potential U.S.-China trade deal grew. The S&P 500 advanced 0.80% for the week to 2,792.67. The Nasdaq Composite improved 0.86% to 7,527.54, and the Dow Jones Industrial Average gained 0.64% to 26,031.81.

The renewed prospects for a trade pact were not the only development investors found appealing last week. There were indications that the Federal Reserve might be a bit less committed to its plans to raise interest rates further this year.1,2

A Look at the Fed Minutes

There were no surprises from the Federal Reserve’s Board of Governors, who released the transcript from their January meeting on Tuesday. Investors pore over the meeting minutes looking for clues about the Fed’s next move on short-term interest rates.

Fed policymakers appeared split on what might be next. Some felt another rate hike was needed to help slow the strong economy, while others favored a “wait-and-see” approach.3 

Home Sales Slump

In January, existing home sales were at their slowest pace since November 2015 and down 8.5% year-over-year. One factor: rising home values. Last month, the median single-family home sale price was $247,500, almost $7,000 higher than a year ago.

Mortgage rates have now fallen for three consecutive weeks, a development that may influence home buying decisions in coming months. Thursday, a Freddie Mac survey found the average interest rate on a 30-year, fixed-rate loan at just 4.35%. (A 30-year, fixed-rate mortgage is a conventional home loan meeting the lending requirements of Fannie Mae and Freddie Mac, but it is not guaranteed or insured by any government agency.)4,5

Final Thought

The Dow Jones and Nasdaq have posted gains for nine straight weeks and are now at levels unseen since early November. Concerns over volatility have decreased, but that does not mean it is off the table. Whatever the market does in the coming weeks and months, remember your investing strategy should be based on your goals, risk tolerance, and time horizon.2

The Week Ahead: Key Economic Data

  • Tuesday: Fed chair Jerome Powell begins two days of testimony on monetary policy in the Senate.
  • Wednesday: The National Association of Realtors releases its latest pending home sales index.
  • Thursday: The federal government provides its first estimate of fourth-quarter economic growth.

The Week Ahead: Companies Reporting Earnings

  • Tuesday: AutoZone (AZO), Home Depot (HD), Medpace (MEDP)
  • Wednesday: Apache (APA), Best Buy (BBY), Office Depot (ODP)
  • Thursday: Anheuser-Busch (BUD), Dell Technologies (DELL), Splunk (SPLK)
Market Index Close Feb 22 Week YTD
DJIA 26,031.81 +0.64 +11.59
NASDAQ 7,527.24 +0.86 +13.45
S&P 500 2,792.67 +0.80 +11.40
Treasury Close Feb 22 Week YTD
10 Year Note 2.65 -0.01 -0.04

Sources: wsj.com, treasury.gov - 2/22/2019
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. Weekly and year-to-date market index returns are expressed as percentages. 10-year Treasury note yield = projected return on investment, expressed as a percentage, on the U.S. government’s 10-year bond. Weekly and year-to-date 10-year Treasury note yield differences are expressed in basis points.

Weekly Tip

Many companies that sponsor employee retirement plans offer matching contributions, sometimes even dollar for dollar.

If your employer will match, make sure you contribute enough to get it. The match amounts to free money.

  1. quotes.wsj.com/index/SPX
  2. marketwatch.com/story/dow-reclaims-26000-and-ends-at-3-12-month-peak-as-stock-market-levitates-on-tariff-hope-2019-02-22
  3. bloomberg.com/news/articles/2019-02-20/fed-minutes-show-officials-unsure-on-need-for-rate-hikes-in-2019
  4. tradingeconomics.com/united-states/existing-home-sales
  5. washingtonpost.com/business/2019/02/21/mortgage-rates-fall-third-week-row

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