I was expecting more price weakness last week than actually appeared in US equity markets. The weakness I expected was off-set by a stronger-than-expected performance by the Nasdaq composite and by solid economic data. The previous week’s rollover was well contained as a result, US equity markets remain in a confirmed uptrend.
Markets received support from the economic calendar. Retail sales M/M for January were 0.2% versus the prior month’s revised -1.6%. The NFIB Small business Optimism Index for February was a healthy 101.7. CPI for February M/M hit consensus at 0.2%. Durable Goods Orders for January (0.4%) were well above consensus of -0.6%. February’s Industrials Production results were 0.1% versus January’s revised reading of -0.4%.
Large-cap tech and chip manufacturers led the way higher for the Nasdaq last week. Large-cap standouts – Broadcom, Intel, Microsoft, and Apple all outperformed to the upside. It was a good week for the broader market as well. All major equity market indices gained ground – with the Nasdaq leading the way. For the week the Nasdaq tacked on 4% while the Dow Industrials rose 2%, and the S&P 500 rose 3%. The move higher effectively erased the previous week’s loses for the broader market.
The focus of this week’s economic calendar is decidedly skewed towards Wednesday, between the EIA petroleum status report, FOMC meeting, FOMC forecasts, and press conference. Fed policy has clearly shifted from tightening to something decidedly more neutral in recent months. That will likely be re-enforced this week. The question in investors’ minds has increasingly morphed from tightening, to neutral, to a timeline for loosening. My sense is that though our economic expansion has slipped modestly in recent months, there is little in our most recent economic data to suggest there has been a significant change in the near term and longer term forecasts in regards economic expansion or inflation. In fact, inflation has been remarkably well-contained while wage growth has been reflected in the data – particularly in the employment report for last month.
Other releases of particular interest this week include Weekly Jobless Claims, the Philadelphia Fed Business Outlook Survey, and Leading Indicators on Thursday. Econoday consensus weekly jobless claims for the week ending 3/16 is 225k – in-line with recent results. The Philly outlook for March is expected to reflect a rebound (4.4) versus February’s -4.1 contraction. Leading Indicators for February are expected to come in at 0.1% versus, January’s -0.1%.
Earnings Calendar highlights:
Tilray Inc. (TLRY)
FedEx Corp. (FDX)
HD Supply (HDS)
Tencent Music (TME)
General Mills (GIS)
Micron Technology (MU)
ConAgra Brands (CAG)
Darden Restaurants (DRI)
Nike Inc. (NKE)
Flickr photo: Iphonedigital
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