The Week on Wall Street
As in February, investors spent most of the first full trading week of March hoping for new details in U.S.-China trade negotiations. While they waited, stock benchmarks drifted downward. From Monday’s open to Friday’s close, the S&P 500 lost 2.55%, while the Dow Industrials took a 2.66% fall, and the Nasdaq Composite weakened 3.12%. The MSCI EAFE index tracking developed markets outside the U.S. and Canada fell 1.09%.1,2,3,4
Why did stocks lose momentum? In a hint that global economic growth might be slowing, the European Central Bank abruptly reduced its 2019 GDP forecast for the eurozone from 1.7% to 1.1%. A disappointing reading on U.S. hiring also raised questions.5
Perplexing Jobs Data
According to the Department of Labor, the economy generated only 20,000 net new jobs in February. This was the smallest monthly gain since September 2017. Nevertheless, the unemployment rate fell to 3.8%, while underemployment declined sharply to 7.3%. (These decreases could reflect furloughed federal employees returning to work.) The average wage rose 3.4% in 12 months, the largest year-over-year increase in a decade.
Harsh winter weather may have impeded hiring last month, and February’s payroll growth could be revised in the Department of Labor’s April report.6
Earnings Season Recap
The fourth-quarter reporting season is all but over. FactSet notes that the S&P 500 has seen earnings growth of 13.4% in Q4, marking the fifth straight quarter with a double-digit rise.7
Stocks lost ground last week, breaking a long string of weekly advances. The extended rally partly reflected optimism that the U.S.-China trade dispute would soon be resolved, but a deal may or may not happen. The week offered a reminder that Wall Street sees both ups and downs. Day-to-day market fluctuations should not cause you to alter your long-term approach.
The Week Ahead: Key Economic Data
- Monday: January retail sales.
- Tuesday: The Consumer Price Index, tracking monthly and yearly inflation.
- Thursday: January new home sales and February retail sales.
- Friday: The University of Michigan’s initial March consumer sentiment index, measuring consumer confidence.
The Week Ahead: Companies Reporting Earnings
- Tuesday: Dick’s Sporting Goods (DKS)
- Wednesday: Smart & Final (SFS)
- Thursday: Adobe Systems (ADBE), Broadcom (AVGO), Dollar General (DG)
|Market Index||Close March 08||Week||YTD|
|Treasury||Close March 08||Week||YTD|
|10 Year Note||2.62||-0.14||-0.07|
Sources: wsj.com, treasury.gov - 3/8/2019
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.