April 2019 Market Recap

Stocks rallied for a fourth consecutive month in April, marking the best start to a year since 1987 for the S&P 500. The index climbed 3.9%, while the Nasdaq Composite jumped 4.9% as each benchmark vaulted to record highs for the first time in more than six months. The Dow Jones Industrial Average underperformed its peers for a second straight month, advancing 2.6% as softer-than-anticipated quarterly profit tallies from key component companies weighed on the 30-stock index. However, first-quarter earnings results were overall "better than feared." Strong results from the big banks helped the Financials sector pace the advance with an 8.8% rise in April. The Communications Services sector also outperformed, jumping 6.2%, as double-digit gains from media and entertainment giants boosted the group higher. Health Care stocks missed out on gains, falling 2.7% as headwinds from regulatory scrutiny outweighed strong corporate results from industry bellwethers. Robust economic releases helped buoy the U.S. dollar to a 23-month high against a basket of its peers, while tepid inflation updates fostered a return of the so-called "Goldilocks" environment. The Labor Department's March jobs report showed non-farm payrolls increased 196,000, a sharp rebound from February's disappointing 20,000 gain. Another report showed the U.S. economy grew at a 3.2% clip in the first-quarter, well above expectations of a 2.3% increase and the best January-March performance since 2014. Separate reports on U.S. inflation, however, showed consumer prices rose at the slowest pace since 2018 in March. This reaffirmed the Federal Reserve expectations of no rate hikes in 2019. Amid the economic data, Treasuries weakened in April, with the yield on the 10-year note ending 10 basis points higher at 2.50%.

February 2019 Market Recap

Equities rallied in February, capping the best start to a year for U.S. stocks in three decades. Optimism on the trade front and a "patient" Federal Reserve helped push the S&P 500 3% higher. The Nasdaq Composite re-entered bull market territory, rising more than 20% above its late-December low, as the tech-heavy index advanced 3.4% in February. The Dow Jones Industrial Average climbed 3.7% for the month, including its longest streak of weekly advances (nine) since 1995. Fourth-quarter earnings reports were another tailwind to the rally, with more than 70% of companies in the S&P 500 topping analyst profit expectations. The Information Technology sector paced the monthly gains, as optimism that the U.S. and China would reach a trade deal boosted chipmakers. The Industrials group, which has been largely viewed as a proxy for the trade dispute, also outperformed.

The Federal Reserve's perceived "dovish" tilt regarding monetary policy also boosted sentiment. The release of the minutes from the January Federal Open Market Committee reiterated the Fed's "patient" approach towards interest rate hikes. In his semi-annual testimony before Congress, Fed Chairman Jerome Powell suggested the U.S. economy remained strong, but was facing "crosscurrent and conflicting signals," as economic data overseas continued to stoke fears of slowing global growth.  Following a better-than-expected update on U.S. fourth-quarter GDP, Treasuries weakened along the curve, sending yields higher. The yield on the benchmark 10-year note finished the month at 2.72% after ending January at 2.64%.
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January 2019 Market Recap

U.S. equities rallied in January, clawing back some of the losses incurred during the worst December retreat since the Great Depression. The S&P 500 jumped 7.9%, the benchmark's largest monthly increase since late 2015, and the best January performance since 1987. The Industrial and Financial sectors, which led the market's descent in the fourth quarter, paced the gains amid a thawing of trade tensions between China and the United States. Energy stocks were another bright spot, rising in tandem with oil prices. WTI crude surged nearly 19% in January for the best-ever start to a calendar year. Investors also focused on fourth-quarter earnings reports. While S&P 500 earnings growth is on track to slow from the robust pace in the prior three quarters, many analysts described the results as "better than feared."

The upbeat investor sentiment was also inspired by a perceived "dovish" tilt from the U.S. Federal Reserve. Following the central bank's January meeting, Chairman Jerome Powell suggested the Fed would be "patient" regarding interest rate hikes, "in light of economic and financial developments." Powell acknowledged concerns about global growth, which were exacerbated by disappointing fourth quarter GDP readings from China and Europe. Following the Fed's adjusted outlook, Treasury yields and the U.S. dollar declined modestly in January. U.S. economic data was mixed, with a flurry of positive updates on the labor market contrasting multiyear lows in several key readings on the real estate market. Meanwhile, a number of other reports including U.S. fourth quarter GDP were delayed by the partial government shutdown.