March 2, 2020

The Week On Wall Street

Stocks fell sharply last week as Wall Street considered how the coronavirus outbreak might influence global business activity and household spending.

The selloff became a correction for the U.S. markets. The S&P 500 retreated 11.49%; the Dow Jones Industrial Average, 12.36%; the Nasdaq Composite, 10.54%. The MSCI EAFE, tracking developed stock markets outside North America, had fallen 6.75% week-over-week by Friday’s closing bell.

On Friday afternoon, Federal Reserve Chair Jerome Powell stated that central bank officials were willing to “use our tools and act as appropriate to support the economy.”1,2,3

Strong Consumer Confidence, Plus A Boost For Incomes

A trio of economic indicators, pertaining to U.S. households, looked solid last week. The Conference Board’s Consumer Confidence Index notched consecutive months above 130 for the first time since July-August 2019, posting a 130.7 February mark. The University of Michigan’s final February Consumer Sentiment Index came in at 101.0, ticking up from a preliminary 100.9.

Friday, the Department of Commerce reported that Americans increased their personal spending by 0.2% in January, while personal incomes improved 0.6%.4,5

Buyers Have Flocked To New Homes

New home sales, according to the Census Bureau, improved 7.9% in January; the annualized pace of new home buying was the best seen since July 2007. Year-over-year, sales were up 18.6%. Housing market analysts cited a favorable economy and favorable weather as factors.6

Final Thought

Right now, there is no forecast for how the coronavirus outbreak may affect consumer demand or supply chains. The impact may not be known for months. But remember, your investment strategy should reflect your risk tolerance, time horizon, and goals, and it also should take into consideration periods of market volatility. Fear is driving decisions in the financial markets. Nobody would blame you if this uncertainty gave you a bit of anxiety as well.

The Week Ahead: Key Economic Data

  • Monday: The Institute for Supply Management’s latest factory activity index arrives.
  • Wednesday: Automatic Data Processing (ADP) publishes its February private payrolls report, and ISM’s index of February service-sector business activity appears.
  • Friday: The Department of Labor presents its February employment report.

The Week Ahead: Companies Reporting Earnings

  • Tuesday: AutoZone (AZO), Ross Stores (ROST), Target (TGT)
  • Thursday: Costco (COST), Kroger (KR)
Market Index Close Feb 28 Week % YTD %
DJIA 25,409.36 -12.36 -10.96
NASDAQ 8,567.37 -10.54 -4.52
S&P 500 2,954.22 -11.49 -8.56
Treasury Close Feb 28  Week % YTD %
10 Year Note 1.13% -0.33% -0.79%

Sources: wsj.com, treasury.gov – 2/28/2020
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

A market drop also presents an occasion to buy shares of large companies at a potentially lower cost.


Citations
  1. wsj.com/market-data
  2. quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices
  3. tinyurl.com/sbs2f9h
  4. investing.com/economic-calendar/cb-consumer-confidence-48
  5. marketwatch.com/tools/calendars/economic
  6. marketwatch.com/story/new-home-sales-soar-to-highest-level-since-2007-2020-02-26

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