Weekly Market View – Week of February 26 – March 2

Last week the markets had little conviction to the upside or downside until the last hour of trading on Friday. For the first time in the week, the market closed at its highs, rather than giving back into the close.

Interest-rate jitters hit the market last Wednesday when the FOMC minutes were released and 10-year Treasuries briefly hit 2.95 percent. The market sold off hard on Wednesday and Thursday, before rallying strongly on Friday, especially into the close. The market has been quite anxious about the 10-year Treasury bond yield rising to 3 percent. The 10-year Treasuries have moved up dramatically this year as can be seen in the chart below.

This week the new Fed Chair, Jay Powell, will give testimony to the House tomorrow and to the Senate on Thursday. As is true of all pronouncements from the Fed, the markets will watch this testimony closely for clues as to the extent and pace of interest rate increases.

Volatility has retreated, but still remains at elevated levels.

Economic Events

Economic news for the week is as follows:

  • Monday
    • 10:00 am – New home sales (actual sales came in below consensus at 593K vs. 645-650K expected)
  • Thursday
    • 8:30 am – Personal income and personal spending
    • 8:30 am – PCE Prices and PCE core prices
    • 8:30 am – Initial unemployment claims for week ending 2/24
    • 10:00 am – Existing home sales for the month of January
    • 10:30 am – Minutes from the last FOMC meeting
  • Wednesday
    • 10:30 am – Crude inventories for the week ending 2/24

Earnings Reports

We continue to get earnings reports, although many of the leading firms have already reported.

Sector Analysis by Month

Note: to enhance readability, the sector analysis now excludes countries outside of the U.S. It does include a measure of international stocks as a whole, emerging markets and China.

Strong Sectors past Month

Even with the bounce back, no sectors were up by the 5% level in the past month that we use to classify a sector as strong. There was only name that qualified for that designation:

  • Volatility up 39% in the past month

Weak Sectors past Month

In late January we had no sectors down at least 5% in the past 20 trading days. Even after the bounce we have a number of sectors that meet this negative criterion.

  • Oil services down -12.6%
  • Oil and gas exploration
  • Energy
  • Homebuilders
  • Gold miners
  • Robotics
  • Consumer staples
  • REITs
  • Retail (-4.7%)

Sector Analysis Past 5 Trading days

Strong Sectors

Most sectors were up in the past 5 trading days with the exception of volatility, precious metals, consumer staples, homebuilders and retail.

Two weeks ago we had a number of sectors up more than 5% as we bounced off our lows. In the past 5 trading days only a few sectors were up 3% or more: 

  • Airlines
  • Technology
  • Steel

Weak Sectors

The only sectors down 3% or more in the past 5 trading days were:

  • Volatility
  • Gold miners

Market Indices

S&P 500 — SPY

Here is a look at the charts of the major indices.

The SPY has steadied above its 50 day moving average after falling below the 50 and 100 day moving averages during the selloff.


The Dow has been outperforming the past several days and is above its key 50 day moving average


The NASDAQ 100 has regained all of its losses. However, a large part of this bounce back is attributable to a handful of stocks including Amazon, Netflix, and Apple.

International stocks ex the US – VEU

International stocks have rebounded but not as sharply as U.S. equities. Also, international stocks had cracked their 200 day moving average which the major U.S. indices did not do.

Volatility Index

Volatility continued to drop last Friday and today as the market strengthened. It had popped up a bit mid-week on the interest rate rise to 2.95 percent, but retreated on the recent strength in the markets. Volatility remains elevated above the abnormally low levels which it was in throughout 2017.

The volatility index, or “fear index,” measures how much money investors are willing to pay for options on the S&P. Investors can buy “put” options on the S&P as a type of insurance on their portfolios if they are concerned that the market is going to sell off.


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