Weekly Market Update, March 17, 2014

General market news

  • Still firmly within the range we’ve been discussing, the yield on the 10-year Treasury bounced off 2.80 percent last Monday and up off 2.60 percent late Friday. Last week’s move was the strongest one-week performance in more than two months. Treasuries sold off early Monday morning, with the 10-year standing at 2.67 percent, in anticipation of the Federal Reserve’s meeting this week.
  • International headlines were on investors’ minds last week. Uncertainty over the situation in Ukraine and fear of escalating tension grew throughout the week as a referendum vote approached over the weekend. In addition, weaker-than-expected economic reports from China put further pressure on equity prices.
  • The Fed is expected to continue its tapering program at its meeting this week. The announcement will come on Wednesday, and markets seem to be in a “wait and see” mode as economic numbers below Fed targets and events in Crimea raise questions.
  • Equity markets slid lower last week, with major indices posting losses between 1.75 percent and 2.50 percent. The S&P 500 split the middle with a drop of 1.91 percent. The best performance was a loss of 1.76 percent for the Russell 1000 Value, while the worst performer for the week was the MSCI Emerging Markets Index, which lost 2.40 percent.

What to look forward to

This week will start off with the release of Industrial Production data. The consensus estimate is an increase of 0.2 percent, which would be quite the rebound from last month’s 0.3-percent decline.

In terms of housing data, we will see the release of Housing Starts and Existing Home Sales. Both data points are expected to have positive results compared with the disappointing results in January.

Finally, the Consumer Price Index will be released on Tuesday, providing some insight into inflation, which is expected to remain under control.

Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index. The Bank of America Merrill Lynch U.S. Broad Market Index tracks the performance of U.S. dollar-denominated investment-grade debt publicly issued in the U.S. domestic market, including U.S. Treasury, quasi-government, corporate, securitized, and collateralized securities. The Bank of America Merrill Lynch U.S. Treasury Index tracks the performance of U.S. dollar-denominated sovereign debt publicly issued by the U.S. government in its domestic market. The Bank of America Merrill Lynch U.S. Mortgage-Backed Securities Index tracks the performance of U.S. dollar-denominated fixed-rate and hybrid residential mortgage pass-through securities publicly issued by U.S. agencies in the U.S. domestic market. The Bank of America Merrill Lynch U.S. Municipal Securities Index tracks the performance of U.S. dollar-denominated investment-grade tax-exempt debt publicly issued by U.S. states and territories, and their political subdivisions, in the U.S. domestic market.