Week in Review

Week in Review: March 18, 2019


U.S. equities regained momentum last week as robust earnings reports from some technology stocks lifted investor appetite. The strong technology performance, combined with signs of tepid inflation, overshadowed softer-than-expected economic data and sparked a broad-based rally. As a result, the S&P 500 advanced 2.9% from the previous week, while the NASDAQ Composite gained 3.8%.

After falling precipitously in December, retail sales showed only a slight uptick in January, suggesting cooling in one of the U.S. economy’s biggest engines. Gloomy reports on industrial production and manufacturing also fell short of expectations, further supporting the narrative of slowing growth. Despite the lukewarm data released during the week, early estimates from the University of Michigan signaled that consumer confidence rebounded during March (see Figure 1), following reports of American workers seeing faster wage increases. Economists stated that the estimated March gain was primarily driven by households with incomes in the bottom two-thirds of the distribution, whose sentiment rose to an index level of 97.3. The measure had previously fallen to 91.2, its lowest mark in two years, following the partial U.S. government shutdown. 

The Labor Department reported on Tuesday that U.S. consumer prices increased 0.2% during February, after remaining unchanged for three consecutive months, according to the headline Consumer Price Index (CPI). Over the past 12 months through February, the CPI rose 1.5%, its slowest pace in over 2 years. Decelerating domestic and global growth and lower oil prices are keeping a lid on inflation, in spite of a tightening labor market and a multi-decade low unemployment rate. Following three months of consecutive declines, energy prices rebounded in February.

International stocks also rallied last week, supported by comments from Chinese Premier Li Keqiang who vowed strong measures to boost the Chinese economy, noting that in addition to tax cuts, the government could use tools such as reserve requirements and interest rates. The measures are coming after China lowered its growth target to 6%-6.5% for 2019, down from around 6.5% last year. Optimism about a trade deal between the U.S. and China looming in the near term further buoyed demand for international equities. As a result, the MSCI Emerging Markets index gained 2.7% from the previous week, while the MSCI EAFE index rose 2.8%.

In the fixed income front, U.S. Treasury prices rallied on Friday, pushing yields lower. The yield on the benchmark 10-year Treasury note hit its lowest level since early this year, following a batch of mixed economic data, coupled with contained inflation readings. Looking ahead, investors will be anticipating the Federal Reserve’s meeting this week. Given the current backdrop, the Fed is expected to maintain its dovish interest rate stance. The Fed’s gathering follows the European Central Banks (ECB) meeting earlier this month where the ECB announced plans for a new round of low-interest, long-term loans to financial institutions and a series of economic outlook downgrades. 

Figure 1: University of Michigan U.S. Consumer Confidence

Index: 03/01/2014 = 100

US Consumer Confidence

Source: Thomson Reuters

Market Returns (USD)





Global Equities

MSCI All Country World

2.8% 12.1% 12.1% -0.6%

S&P 500

2.9% 13.1% 13.1% 4.8%

Dow Jones Industrial Average

1.6% 11.5% 11.5% 6.3%


3.8% 16.2% 16.2% 3.9%

Russell 2000

2.1% 15.5% 15.5% -0.1%


2.8% 10.5% 10.5% -5.0%

MSCI Emerging Markets

2.7% 9.7% 9.7% -10.9%

Fixed Income

ICE BofAML Municipals 1-10 Year A-AAA 

0.0% 1.6% 1.6% 4.1%

Bloomberg Barclays Intermediate Government/Credit

0.2% 1.5% 1.5% 3.7%

Bloomberg Barclays High Yield Bond

0.7% 6.6% 6.6% 5.0%

JPMorgan GBI Emerging Markets Global Diversified

1.1% 3.9% 3.9% -5.7%

Market Levels


Week Ago

Year End

Year Ago

S&P 500

2822.48 2743.07 2506.85 2747.33

Dow Jones Industrial Average

25848.87 25450.24 23327.46 24873.66

10-Year U.S. Treasury Yield (Constant Maturity)

2.59% 2.62% 2.69% 2.82%

Gold ($/oz)

$1,302.40 $1,298.30 $1,282.49 $1,316.10

Crude Oil ($/barrel)

$58.52 $56.07 $46.08 $57.49

U.S. Dollar / Euro ($/)

1.13 1.12 1.15 1.23

U.S Dollar / British Pound ($/£)

1.33 1.30 1.28 1.39

Japanese Yen / U.S. Dollar (¥/$)

111.48 111.17 109.69 106.34
What's Important

U.S. equities rallied following strong tech earnings and signs of contained inflation

International equities surged following China’s stimulus pledge