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%. CAR 0319-00013

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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.