Chicago is finally showing some signs of spring today but the markets weren’t so lucky this past week. Equities mostly were down for the week with the exception of the Dow Industrials, which was barely in positive territory. The week got off to a notably negative start with techs and small caps especially weak. The downdraft came from a larger than expected drop in the PMI for manufacturing and the continued geopolitical concerns in the Ukraine. There was some bounce-back Tuesday after a better-than-expected number for consumer confidence but Wednesday saw more losses. President Obama called for greater sanctions on Russia which sent many of the high-flying outperformers down sharply as investors took profits. Banks sold off on Thursday after results on the Federal Reserve’s Stress Tests were released after Wednesday’s close. Citigroup led the downside as they came up short of requirements and their capital plan was rejected. Friday saw a snap-back rally mid-day as traders may be setting themselves up for end of the quarter ‘window dressing.’ The S&P 500 Index (SPX) fell 0.5% while the Dow Jones Industrial Average ($DJI) was up a minimal 0.1%. The tech-heavy Nasdaq (NDX) fell 2.8% and the market-leading small caps (RUT) led the downside finishing the week off 3.5%. The S&P 500 Index is the only major index up for the year (+0.5%).
Despite the overall weakness in stocks this past week, option Volatility actually fell. The CBOE Volatility Index (VIX) fell 4% for the week as traders continue to shun buying options or protection. The S&P 500 Index (SPX) is only off 1.3% from all-time highs and sentiment is still bullish for the most part. Investors are showing resilience in the face of geopolitical turmoil and slower global growth and continue to buy any dips in stocks. Despite this, we have seen a rotation from tech’s and small caps to the more stable Blue Chip stocks over the past couple of weeks. This could be a sign that a pull-back or correction is around the corner.
Treasury yields ended the week mixed with most on the short end up while long rates eased. Throughout the week, there was sentiment that the Fed may raise policy rates sooner than earlier believed, putting upward pressure on mid-term yields (those due in more than a year). The 30-year Bond was strong this week (until Friday) as some traders sought out the safety of Treasuries. Consensus is for higher rates by the end of the year but the 10-year yield is still in a tight range near 2.7%. Gold futures (/GC) broke their recent bullish trend which we expected as it had risen over $100 on weak inflation and tepid demand. The precious metal is now back below $1300 an ounce and may continue to trend lower.
This week is heavy with economic news with the highlight being Friday’s employment report. Forecasts are a little stronger this month as traders are a little more upbeat after recent improvement in jobless claims. Investors will be watching motor vehicle sales for March to see if there is any post-adverse-weather bounce in sales, which have been extremely weak. The spotlight is on Fed Chair Janet Yellen’s first quarterly press conference, the Fed statement, and Fed forecasts. Earnings season has all but wrapped up so focus will solely be on economic data and the turmoil in Russia and Ukraine.
发表于 2014-3-30 17:15
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发表于 2014-3-30 17:22
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