Monthly Market Insights | April 2019

US Markets

Stock prices finished the month higher despite a volatile domestic bond market and several poor economic reports.

The Dow Jones Industrial Average rose 0.05 percent, while the Standard & Poor’s 500 Index gained 1.79 percent. The NASDAQ Composite led the major indices, climbing 2.61 percent. 1

	It’s harder to stay on top than it is to make the climb. Continue to seek new goals.
Pat Summitt, 8-time NCAA Champion and “Naismith Women's Collegiate Coach of the Century” recipient.

As the month opened, stock prices fell due to waning optimism on U.S.-China trade talks and a troubling employment report.

Trading Signals

Market sentiment improved as the month progressed on, raising hope that a trade agreement might be reached. Chinese officials reassured negotiators that they would not use currency devaluation as leverage in the ongoing trade dispute.

The market moved higher still, led by a renewed enthusiasm for technology companies. A rebound in retail sales helped offset some of the other disappointing economic news.

The Fed’s Plan

Stock prices continued their advance in mid-March after Fed Chair Jerome Powell said that no more rate hikes were planned for this year.2 But in the following days, stocks staged a broad retreat on a weak manufacturing report out of Germany, which reignited fears of a global economic slowdown.

Stocks drifted higher in the final week as prices fluctuating in the wake of declining bond yields. Were the falling yields signaling an economic slowdown or merely a function of recent monetary easing by central banks? Optimism prevailed with stocks closing higher for the week, putting an exclamation point on a solid first-quarter performance.

Sector Scorecard

The majority of industry sectors finished higher this month, with gains in Communication Services (+1.63 percent), Consumer Discretionary (+2.77 percent), Consumer Staples (+2.58 percent), Energy (+1.49 percent), Real Estate (+4.38 percent), Technology (+3.42 percent), and Utilities (+1.49 percent), while Financials (-3.32 percent), Health Care (-1.08 percent), Industrials (-2.76 percent), and Materials (-0.05 percent) fell in value. 3

U.S. Market Recap for March 2019
S&P 500 1.79% Month ‌ 13.07% Year-to-Date	NASDAQ 2.61% Month ‌ 16.49% Year-to-Date	Russell 1000 1.59% Month ‌ 13.43% Year-to-Date	10-Year Treasury 2.41% Month ‌ -0.28% Year-to-Date
Yahoo Finance, March 31, 2019. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid.

What Investors May Be Talking About in May

Lyft, Inc., one of the pioneers of the ride-sharing industry, closed on its initial public offering (IPO) on Friday, March 29th, kicking off what may be a big year for IPOs. Up to 226 private companies have started the process of going public, including several well-known names, such as Uber and Airbnb.4

IPO offerings were slowed by the partial federal government shutdown this year. The shutdown prevented the Securities and Exchange Commission from performing the necessary regulatory reviews.

Watch IPO Activity

The IPO calendar indicates different things to different investors. One perspective is that a large number of IPOs may be a signal of a market top. On the other hand, it may mean that the risk appetite of investors has returned, which may be a healthy signal for the financial markets.

It’s impossible to know which is the more accurate view. Should some big-name IPOs stumble, it may not only deter other companies from their own public offerings, but it may affect market psychology. Conversely, an enthusiastic reception of these IPOs may serve to underpin further market advances.

World Markets

International equities were mixed in March, thanks to economic weakness in both Europe and Asia. The MSCI-EAFE Index slipped 0.42 percent.5

European markets were mostly higher, with Germany gaining 1.4 percent and France picking up 2.1 percent.6

Stocks in the Pacific Rim countries were mixed, with Australia climbing 0.2 percent and Japan dropping 0.8 percent.7

World Market Recap for March 2019
Emerging Markets	March	Year-to-Date
Hang Seng (China)	3.5%	14.6%
Kospi (Korea)	-2.5%	4.9%
Nikkei (Japan)	-0.8%	6.0%
Sensex (India)	7.5%	6.9%
Jakarta Composite (Indonesia)	0.4%	4.4%
Bovespa (Brazil)	-0.2%	8.6%
IPC All-Share (Mexico)	1.1%	3.9%
Merval (Argentina)	-3.0%	10.5%
ASX 200 (Australia)	0.2%	9.5%
Europe
DAX (Germany)	1.4%	10.6%
CAC 40 (France)	2.1%	13.1%
Dow Jones Russia Index (Russia)	0.9%	12.1%
FTSE 100 (Great Britain)	2.8%	8.4%
Yahoo Finance, March 31, 2019. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

Indicators

Gross Domestic Product

The final assessment of fourth-quarter Gross Domestic Product was a 2.2 percent increase, which represents a downward revision from an earlier estimate of 2.6 percent growth. For the 2018 calendar year, GDP increased 2.9 percent.8

Employment

The employment report presented a perplexing picture of the labor market, with new job creation of 20,000 in February. However, the unemployment rate dropped from 4.0 percent to 3.8 percent, and wages rose a robust 3.4 percent compared to February 2018.9

Retail Sales

Retail sales bounced higher in January, rising 0.2 percent.10

Industrial Production

Industrial production rose 0.1 percent, dragged down by weakness in manufacturing, which declined 0.4 percent.11

Housing

The delayed January report for housing starts saw an 18.6 percent jump. 12 This encouraging beginning to the new year was dimmed by an 8.7 percent drop in housing starts for February.13 New home sales reports were delayed into March due to the backlog caused by the federal government shutdown.14

Consumer Price Index

The prices of consumer goods rose 0.2 percent in February. Core inflation – which excludes volatile food and energy prices – suggests inflation may remain somewhat stable, rising just 0.1 percent.15

Durable Goods Orders

Orders for manufactured products designed to last three years or longer rose 0.4 percent, making this the third straight month orders have increased.16

The Fed

Following the end of its two-day meeting, the Fed decided to leave the federal funds rate unchanged.

At the close of the meeting, the Fed also announced that it was slowing the drawdown of its $4 trillion balance sheet beginning in May and ending bond sales by September.

The status of future hikes was clarified, as a majority of voting members indicated that another hike this year would likely be unnecessary. This suggests that only one additional hike may be necessary in the next three years, down from December’s expectations for three further hikes.17

By the Numbers