Market Update - March 25, 2019Submitted by Jodi Vleck , Beta Wealth Group on March 25th, 2019
For the week ended March, 22nd, 2019 U.S. stocks dipped slightly with the S&P 500 closing down less than 1%. Poor industrial sentiment data out of Europe was the culprit of choice among market commentators. Equities had slightly rallied mid-week following the dovish Fed statements indicating no likely rate increases on the horizon but caused U.S. fixed income markets to have a very strong week Additionally, perceived threats to tech company earnings weighed on the equity markets.
The Fed left rates unchanged, while signaling no rate hikes for the balance of 2019 and acknowledged global uncertainty and a muted inflation outlook. The ever so delicate balancing act between rates, inflation and a healthy but slowing economy will likely be the key driver of equity markets going forward. The yield curve briefly inverted for the first time since 2007 because of the Fed’s dovish stance that had investors wondering if a recession is in the cards. With unemployment at a near 50 year low (3.8%) and inflation just under 2%, the Fed has the flexibility to be patient before acting on rates anytime soon.
Fed commentary sparked a sell off in financials with a 5% loss. Lower rates and lack of positive slope in the yield curve hurt bank margins. Meanwhile consumer discretionary and staples posted market inflows.
Crude rose above $60/barrel during the week before settling at just over $59 by Friday. A meeting of OPEC members last week reaffirmed a near-term policy of production cuts to boost crude prices, which reinforced the tide of prices upwards, while risk aversion tempered a bit of that effect by later in the week.