Weekly Market Commentary: March 7, 2016

Provided by geralt/Pixabay
Provided by geralt/Pixabay

When Mark Twain’s death was reported in the United States, he was alive and well in London. He responded to news accounts with a note saying, “The report of my death was an exaggeration.”

Last week’s jobs data suggest the same is true of reports that a recession is imminent in the United States. Barron’s explained:

“Thank goodness the mid-February fears of recession that brought markets to their knees – and the 10-year Treasury yield to a low of 1.53 percent – were overblown. Friday’s nonfarm payrolls report was the latest confirmation. It showed that 242,000 jobs were created last month, far more than expected and up from the previous month’s reading, which was itself revised higher.”

The employment data weren’t all positive, though. Average hourly earnings declined when it was expected to increase and the number of hours worked was lower, on average, than it has been for two years.

Regardless, The Wall Street Journal said employment, consumer, and business spending reports helped calm investors’ fear the U.S. economy was losing momentum. Some investors sold bonds, which helped push the yield on 10-year Treasury notes higher.

Investors also were encouraged by last week’s oil price rally, according to CNBC. A better demand outlook, coupled with cuts in supply, boosted oil prices by 9.5 percent in one week.

U.S. stock market performance reflected investors’ renewed optimism. USA Today said, “Stocks have rebounded from their worst start to a year ever, with the benchmark S&P 500 trimming its year-to-date loss to 2.15 percent after being down by more than 10 percent on February 11.” At the end of last week, the Standard & Poor’s 500 Index was about 6 percent below its record high.

Data as of 3/4/16 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) 2.7% -2.2% -5.1% 9.5% 8.7% 4.6%
Dow Jones Global ex-U.S. 5.0 -3.6 -13.2 -2.1 -2.5 -0.3
10-year Treasury Note (Yield Only) 1.9 NA 2.1 1.9 3.5 4.7
Gold (per ounce) 4.2 20.3 6.5 -6.7 -2.2 8.5
Bloomberg Commodity Index 3.9 -0.2 -23.2 -16.8 -14.3 -7.0
DJ Equity All REIT Total Return Index 3.9 0.0 0.6 8.4 10.7 6.2

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

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