March Madness

March 21, 2016

Equities continued their march higher for a fifth straight week as the S&P 500 and DJIA climbed out of the red in terms of year-to-date performance.  For the week, the DJIA closed at 17602 for a weekly gain of 2.26%. The broader-based S&P 500 closed at 2050 to finish up 1.37% for the week.  International markets were also strong as the MSCI EAFE and MSCI EM finished the week up 1.02% and 3.28% respectively.  Treasury yields closed the week lower across the broad; the dollar weakened vs most other currencies following the Fed’s decision to maintain interest rates; oil continued its rally with West Texas Intermediate (WTI) and global Brent closing above $40/barrel.

Major economic news for the week included: Commerce Department reported Tuesday that retail sales dipped 0.1% in February beating expectations; the producer price index (PPI) fell 0.2% in February in-line with expectations; on Wednesday, the Consumer Price Index (CPI) fell 0.2% in February and is now up 1% for the last twelve months.  The most important economic news for the week came Wednesday as the Federal Reserve announced it held benchmark rates constant and lowered its forecasts for both year-end 2016 and year-end 2017. Specifically, the statement noted that economic activity has been increasing at a moderate pace on the back of increased household spending.  The Fed left open the timing of future rate hikes and now expects two rate hikes in 2016 instead of four.

Despite more dovish guidance from the Fed, markets should continue to remain volatile as diverging monetary policies, oil volatility, and the political rhetoric remain.  As always, don’t look too much into the day-to-day noise of the markets and keep your eye towards the long-term.

“In politics stupidity is not a handicap.”  –  Napoleon Bonaparte