Market Perspective for March 8, 2019

Stocks experienced the first down week since December. The S&P 500 Index declined 2.16 percent on the week. The broad market had gained 19 percent from its December low through last Friday.

SPDR Utilities (XLU) and SPDR Real Estate (XLRE) gained 0.74 and 0.49 percent respectively as bond yields declined. SPDR Energy (XLE) fell 3.84 percent, due to a dip in the oil prices, as well as news that Norway’s sovereign wealth fund would divest its energy exploration and production holdings.

The February employment report missed forecasts of 175,000 new jobs, coming in at 20,000. However, both December and January job gains were revised higher. The unemployment rate fell to 3.8 percent. The broader measure of unemployment that counts discouraged workers and those working part-time, but who want full time jobs, tumbled from 8.1 percent to 7.3 percent. This is the lowest reading since March 2001. Wage growth accelerated 0.4 percent in February and up 3.4 percent from last year.

Although there were signs of a housing market slowdown in December, new homes sales came in higher than projected at an annualized pace of 621,000. Housing starts in January jumped to an annualized pace of 1.23 million from 1.037 million in December.

The ISM services PMI jumped to 59.7 percent in February.

The U.S. Dollar Index broke above 97.50 on Thursday to a new 52-week high after the European Central Bank (ECB) acknowledged economic growth was slowing in the Eurozone. The ECB ended quantitative easing in 2018 and economists expected a rate hike this summer. Officials said the first hike won’t occur until 2020.

Retail earnings season was in full swing. SPDR S&P Retail (XRT) slipped 4.05 percent as more than one retailer announced store closings. Earnings were strong though, with Target (TGT), Kohl’s (KSS), Costco (COST) and Abercrombie & Fitch (ANF) seeing positive moves following earning reports.

H&R Block (HRB) and Vail Mountain Resorts (MTN) also saw their shares increase after delivering solid earnings reports.

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