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As Equity Prices Rise, Downside Risks Mount
U.S. equities advanced yet again last week with the S&P 500 Index climbing 0.7%. Economic data continued to come in better than expected. Consumer confidence reached its highest level since 2001 last month while the ISM non-manufacturing index, which measures business activity and employment trends, showed its strongest reading since late 2015.
The Equity Rally Should Persist, but Expect Bumps
As has been the case for the past couple of months, investors continued to be highly attuned to the political backdrop last week. Early in the week, concerns over the president’s immigration and trade policies cased unease, but sentiment improved on Thursday after Donald Trump signaled a near-term announcement on tax reform.
The Post-Election Rally May Be Losing Steam
U.S. equities finished mostly lower last week, with the S&P 500 Index down 0.9%. Rising interest rates and the climbing U.S. dollar weighed on sentiment, and investors started turning from broad hopes of fiscal stimulus and tax reform to wondering about specifics.
Investors Await Election and Fed Rate Outcomes
U.S. equities moved slightly higher last week, with the S&P 500 Index climbing 0.4%.1 Corporate earnings results were solid, while data showed economic stabilization in China. Investors also reacted positively to high-profile mergerand-acquisition news.
What Factors Will Drive Equities from Here?
During the height of the financial crisis, the Federal Reserve and other central banks stepped in to stave off complete global financial catastrophe. In the ensuing recovery, monetary policy has remained extremely accommodative and been largely responsible for an equity bull market that is nearly eight years old.
Future Equity Gains May Require Earnings Improvements
U.S. equities climbed once again last week thanks to a Friday rally. The S&P 500 Index climbed 0.2% for the week. The first presidential debate dominated
discussion early in the week, and investors focused on what Deutsche Bank’s capitalization issues could mean for the global banking system.
Investor Confidence Is Slowly Improving
Equity markets have been trendless and little changed over the past month.
Stocks drifted lower last week, with the S&P 500 Index falling 0.7%. The main
economic event was Federal Reserve Chair Janet Yellen’s speech at Jackson
Hole on Friday, where she indicated rate hikes were looking more likely.
The Slow Growth Race Seems Undeterred for Now
U.S. equities were primarily unchanged last week and have moved mostly
sideways for the last few weeks. The positive surprise in the July jobs report
had sparked discussion that the Federal Reserve would raise interest rates
in the near-term, but softer-than-expected U.S. economic data somewhat
dampened expectations.
Equities Settle Down After an Extended Rally
Equity markets digested a great deal of information last week. Corporate
earnings continued to improve (particularly in the technology sector) and
the U.S. dollar and oil prices declined. The Federal Reserve acknowledged
financial risks have been diminishing, as the economy appeared to stabilize.
Confidence About the Global Economy Is Improving
U.S. equities notched a fourth week of gains with the S&P 500 Index climbing
0.6%. The primary forces behind the rally remain better-than-expected
corporate earnings, stability in the banking sector and a growing sense that
equities appear more attractive than bonds given low Treasury yields. In our
opinion, the main risk to equities is a possible spike in bond yields. Despite an
improving economy and growing prospects for an additional rate hike by the
Federal Reserve, however, we think such an event is unlikely.
Equities Reach New Highs as Confidence Improves Modestly
The S&P 500 Index advanced 1.5% last week, marking the third straight
week in which U.S. stocks advanced more than 1%.
We attribute the recent rally to three factors: 1) A growing realization that equities are more attractive
than bonds, given low Treasury yields; 2) An improving corporate earnings
outlook for the next 12 months; and 3) A sense that Brexit risks should be
relatively well contained thanks in part to stability in the banking system.
Equities May Struggle, but Should Outperform Other Asset Classes
Last week started on a horrific note with the massacre in Orlando. That event
and growing anxiety over the possible U.K. exit from the European Union (the
Brexit) dragged down investor sentiment. The S&P 500 Index fell 1.1% last
week. Financials came under pressure, while the more defensive telecom and
utilities sectors bucked the broader trend and gained ground. Non-U.S. stocks
fared even worse, with European markets declining around 2% and Japanese
stocks dropping over 3%.
The Intermediate Outlook Is Brighter Than the Near-Term
Equity markets were mixed last week, rising in the first half of the week before
declining. Signs of stabilization in China and a lower likelihood of near-term
Federal Reserve tightening helped markets, while economic growth worries,
the upcoming referendum in England to determine whether to remain a part
of the European Union (the “Brexit” vote) and falling bond yields weighed on
stocks. For the week, the S&P 500 Index declined a modest 0.1%.
Despite Uncertainty, Market Conditions Should Improve
A number of events drove investor behavior last week, including an
announced delay in implementing a new sales tax in Japan, European
Central Bank and OPEC meetings and a highly disappointing U.S. jobs
report. Despite all of the activity, however, the S&P 500 Index was virtually
unchanged for the week.
Equities Show More Positive Than Negative Signs
Early in 2016, financial markets were dominated by a negative feedback loop.
Chinese economic conditions were deteriorating, which drove fears of global
deflation. Oil prices fell as a result, which put downward pressure on credit markets,
the banking system and the broader global economy. Those trends have recently
started to reverse. Confidence in the global economy is growing, oil prices are rising
and stabilizing, worries about Chinese currency devaluation are receding and credit
markets appear healthier.
Economic Growth and Inflation Are Both Moving Higher
U.S. equities were mixed last week. The S&P 500 Index snapped a three-week losing streak and climbed 0.4%, while the Dow Jones Industrial Average was down fractionally.1 The biggest story last week was a growing sense that the Federal Reserve might begin raising interest rates sooner than previously anticipated. Corporate earnings were also in focus, with retailers continuing to show poor results.
Long-Term Positives Outweigh Negatives for Equities
The S&P 500 Index fell 0.4% last week, although it remains in positive territory
for the year. The retail sector was a heavy focus last week as earnings results
were broadly disappointing. The cancellation of the Staples/Office Depot
merger also caused sentiment to sour on retailers. The rally in the U.S. dollar
continued, as U.S. growth continues to outpace most of the rest of the world.
Oil prices rallied while most industrial metals were lower.
The Global Economy Remains Soft, But Appears to Be Healing
The S&P 500 Index slipped 0.3% last week, is down about 3% from its recent high and is in marginally positive territory for the year. Economic growth concerns came to the forefront due to the relatively weak April jobs report. Politics also received increased attention as Donald Trump solidified his position as the presumptive Republican nominee. Commodity-related segments of the market came under pressure, while consumer staples and utilities outperformed.
The Economy and Earnings Should Strengthen Later This Year
Equity markets fell last week, with the S&P 500 Index declining 1.2%. Monetary
policy was in focus. The Federal Reserve meeting generated debate about the
timing of the next rate hike and the Bank of Japan surprisingly failed to move
rates even further into negative territory. Earnings were generally weak, while a
fall in the value of the dollar led to another rally in commodity prices.
Earnings Remain Key to Equity Forecast
Equities climbed yet again last week, with the S&P 500 Index rising 0.5%.
Corporate earnings were mixed, and the biggest market story was ongoing
strength in commodities, particularly oil and metals. Bank stocks rallied
strongly for a second week, while defensive market segments struggled to
keep pace.
Expect Economic and Market Improvements Later in 2016
The uneven market uptrend in place since mid-February resumed last week,
with the S&P 500 Index climbing 1.7%. The primary catalyst appeared to be
better-than-expected corporate earnings results in the still-early reporting
season, particularly from the banking sector. As a result, bank stocks
performed particularly well, rising 7% last week, marking the best weekly gain
in over four years. Investors also focused on better economic data coming
from China and ongoing evidence that the U.S. economy is growing slowly.
Potential Earnings Improvements Remain a Critical Catalyst
Equity markets retreated last week amid multiple crosscurrents as the S&P 500
Index fell 1.2%. Currency and commodity markets were in focus. The soaring
value of the yen complicated the Bank of Japan’s interest rate decisions, while
oil prices rose sharply on expectations for improved global economic growth
and a possibility of production cuts. Investors also focused on the regulatory
environment, as the Treasury Department rolled out restrictive rules governing
corporate inversions.
The Positives Outweigh the Negatives for the U.S. Economy
The U.S. equity rally resumed last week with the S&P 500 Index climbing 1.8%. Although expectations for the upcoming corporate earnings season are low, investors chose to focus on the positives. Specifically, investors reacted to dovish comments made by Federal Reserve Chair Janet Yellen in her speech at the Economics Club of New York, which counteracted some more hawkish comments made by Fed officials the previous week. Other asset classes came under pressure, including commodities and oil, causing some skepticism about the recent rebound. The oil sell-off was due to heightened doubts about the ability of major producers to formalize a production freeze agreement.
Conditions Are Improving, but Investors Remain Skeptical
U.S. equities snapped their five-week winning streak and dropped slightly in a holiday-shortened trading week as the S&P 500 Index fell 0.7%. The news was dominated by the terrorist attacks in Brussels, but outside of a short-lived move to safe-haven assets, the horrific events appear to have had limited market impact. Instead, investors appeared to have taken a step back in response to some more hawkish comments from Federal Reserve officials and a sense that the strong rally since mid-February may have been overdone.
Dovish Monetary Policy Signs Push Risk Assets Higher
The macro backdrop remained positive for risk assets last week. The Federal Reserve issued a surprisingly dovish statement, oil prices continued to climb and the crowded long-dollar trade unwound further. As a result, the S&P 500 Index climbed 1.4% and moved into positive territory for the year.
Equities Advance Again, But Risks Lurk on the Horizon
Equities posted a fourth consecutive week of gains for the first time since
last November. The S&P 500 Index was up 1.2% due in part to yet another
increase in oil prices and a positive reaction to the European Central Bank’s
policy easing announcement.
Equity Prices Advance Again as Negative Signals Diminish
The “risk-on” trend continued last week, helped mainly by stronger U.S.
economic data, heightened expectations for more European Central Bank
stimulus and additional stabilization in oil prices. High yield spreads fell and
equities rose, with the S&P 500 Index climbing 2.7%. Over the past three
weeks, U.S. stocks have nearly recovered all of the ground they lost earlier
in the year.
Signs of Hope Emerge, but Pessimism Remains High
Equity prices soared higher last week around the globe. In the United States, the S&P 500 Index climbed 2.9%, and gains in Europe and Asia were even higher. However, U.S. stocks continue to lead the pack year to date. At least some of the gains can be attributed to an oversold bounce and overly negative sentiment. Relative stability in oil prices and in China, along with decent economic and earnings data, helped as well.
A Recession Remains Unlikely Despite Market Turmoil
Equity prices fell again last week, with the S&P 500 Index dropping 2.6% despite a significant bounce on Friday. Investors continued to focus on downside risks and fears of slowing growth. Rising concerns over central banks adopting zero or negative interest rate policies also detracted from market sentiment, drove confidence lower and resulted in a sharp sell-off in banking sector stocks.
Equities Remain Under Pressure as Investors Focus on the Negatives
U.S. equity prices fell again last week as investors followed the “de-risking”
theme that has dominated most of 2016. The S&P 500 Index dropped 3.0% for
the week. Oil prices staged a slight rebound last week, as expectations rose
for coordinated production cuts from OPEC countries and Russia.
The dollar experienced a sell-off last week as well, which provided some support for the
hard-hit commodity-related equity sectors.
Equities Rally as Oil and Monetary Policy Remain in Focus
Volatility remained high last week as U.S. equities regained some ground, with the S&P 500 Index rising 1.8%. Stocks soared on Friday in response to the Bank of Japan’s decision to adopt a negative interest rate stance. Oil prices also rose over speculation that global production might fall. Corporate earnings were mixed, as results continued to be held back by the long-term decline in lower oil prices, a soft economic backdrop and the strong dollar.
Markets Recover (for Now) as Investors Remain Wary
Equities remained volatile last week as the S&P 500 Index gained 1.4%
following two weeks of sharp declines. The rebound didn’t appear to be
driven by any fundamental shifts, although rising oil prices and expectations of
additional policy support from the European Central Bank and Bank of Japan
helped. In some ways, last week’s bounce may have been due to a reaction
from oversold conditions, and we are not seeing technical signs that would
suggest these gains will have sustained traction. Investors remain skeptical and
seem to be looking for the next crisis.
The Sharp Equity Sell-Off Continues as Sentiment Sours
Equity markets remained in free fall last week, with the S&P 500 Index
dropping another 2.2%. Mixed economic data, a renewed collapse in oil
prices, financial turmoil in China and worries over credit conditions and
corporate earnings prompted fears that the U.S. economy may be heading for
recession. This put additional downward pressure on equity markets and other
risk assets.
China Worries Trigger a Tough Start to the New Year
Equities dropped sharply last week with the S&P 500 index losing 5.9%, its worst first trading week of the year on record.1 Worries about slowing Chinese growth and policy uncertainty were the main culprits for the rout, and sagging oil prices triggered concerns about corporate earnings. Late in the week, markets saw a brief reprieve in light of a strong December jobs report.
2015 Recap and a Look to the Year Ahead
Sir John Templeton coined the phrase, “Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.” In 2015, we expected investors to transition from “skepticism” to “optimism” as we experienced (1) solid momentum in U.S. economic growth with low inflation, (2) a pickup in consumer spending based on job growth, confidence and a positive wealth effect, (3) solid earnings growth, (4) stimulus from low commodity prices and financing costs and (5) a still-good liquidity environment aided by stimulus from non-U.S. central banks.
Weakness in Oil Puts Downward Pressure on Equity Prices
U.S. equities fell sharply last week, with the S&P 500 Index declining 3.7%.
This was its largest loss since August and the second-largest downturn of the year.
A sharp sell-off in oil prices was the main cause, along with credit and liquidity
concerns within the high yield market. The energy sector was the worst
performer last week and financials also took a hit.
In contrast, more defensive areas such as utilities, consumer staples and health care held up better.
An Evolving Investment Landscape May Benefit Equities
Equity markets were volatile last week, losing ground early before rebounding.
Sentiment soured over a more modest easing announcement than expected
by the European Central Bank (ECB). OPEC’s decision to leave oil production
unchanged triggered a drop in energy prices, which also acted as a drag on
equities. Additionally, a weak manufacturing report contributed to the gloomy
tone. However, a strong jobs report on Friday seemed to pave the way for the
Fed to raise rates this month and allowed equity prices to rally strongly.
Reasons to Stick with a Pro-Growth Investment Stance
U.S. markets were relatively quiet last week due to the Thanksgiving holiday.
Economic data were generally positive and investors seemed less concerned
about increasing evidence that the Federal Reserve will raise rates at its policy
meeting in December. The S&P 500 Index was up fractionally for the week.
Smaller capitalization stocks outperformed, as did the consumer staples and
energy sectors.
Outside of the United States, Chinese stocks sold off sharply
on Friday as investors grew nervous about policymakers’ latest attempts to
regulate the Chinese brokerage industry.
The Back-and-Forth Continues as Equities Gain Ground
U.S. equities climbed sharply last week, with the S&P 500 Index advancing 3.3%, essentially erasing losses from the prior week.1 Somewhat surprisingly, investors did not focus on the terrorist attacks in Paris, paying more attention to the positives. The October Federal Reserve minutes seemed to strike the right balance between raising expectations for a December rate liftoff and maintaining a measured pace. Merger and acquisition headlines were also in the news and there were some bright spots on the corporate earnings calendar.
Equities Decline, But Long-Term Trends Look Positive
U.S. equities came under pressure last week, with the S&P 500 Index falling
3.6%, its largest pullback since late August. A number of issues contributed to
the decline, including valuation concerns driven by the recent price rally and
struggling earnings. Some negative earnings results from department stores
and ongoing unease over Fed policy also contributed to souring sentiment.
For the week, utilities was the only sector to advance, while energy, technology
and consumer discretionary led the way lower.
Global Growth Should Strengthen Next Year, Lifting Equities
Markets were mixed last week, but the S&P 500 Index was up 0.2%, posting its fifth consecutive weekly gain. Last week’s highlight was Wednesday’s Federal Reserve meeting. The central bank left rates unchanged, but indicated the possibility of an increase in December. Corporate earnings were also in the news, with several companies posting positive results. The health care sector made a notable turnaround to become the best performing last week while utilities lagged.
Results 1–50
of 115 found.
