Performance for Week Ending 3/15/2019:
The Dow Jones Industrial Average (Dow) gained 1.57%, the Wilshire 5000 Total Market IndexSM (Wilshire 5000SM) added 2.79%, the Standard & Poor’s 500 Index (S&P 500) rose by 2.89% and the Nasdaq Composite Index (NASDAQ) tacked on 3.78%. Sector breadth was positive with all 11 of the S&P sector groups finishing higher. The Technology sector (+4.87%) was the best performer followed by Healthcare (+3.22%) and Energy (+3.21%).
||Closing Price 3/15/2019
||Percentage Change for Week Ending 3/15/2019
||Year-to-Date Percentage Change Through 3/15/2019
*See below for Index Definitions
MARKET OBSERVATIONS: 3/11/2019 – 3/15/2019
After posting sharp losses during the prior week, the major market indices rebounded following hints of stabilization in China’s economy and a tame reading on US consumer inflation. The latter suggests that the Fed is likely to maintain its patient approach to raising interest rates. During a recent appearance on “60 Minutes,” Fed Chairman Powell reiterated that he and his colleagues were in "no hurry" to raise interest rates in the world's largest economy.
The ongoing “dripping” of favorable progress around the US/China trade situation was also a key driver for the broader markets. Last week, Chinese Vice Premier Liu He spoke by telephone with U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer and according to the Chinese state media, Washington and Beijing have made "concrete progress" on the text of their trade pact. President Trump chimed in by saying that the U.S. would know where the trade agreement stood over the next three to four weeks. While an agreement doesn’t appear likely before the end of this month, as long as real progress is seen being made, the market will likely be patient, although an extension that goes beyond April probably wouldn’t be well received by the market.
From a technical point of view, the S&P 500 finished the week above the 2,800-resistance level and now sits at the highest level since October 9. The 2,800 area has been closely watched as it has been a level that the S&P has failed to hold above in recent months (2800 will now be looked at as a level of near-term support). Last week’s advance leaves the S&P less than 4.0% below its all-time highs reach last September. Sector performance over the past few months has been dominated by sectors that are sensitive to the economy, suggesting that the “dovish” pivot by the Fed coupled with the stabilizing Chinese economy and growing prospects of a trade deal with China, should result in a better growth environment in the months ahead.
Outlook: We maintain a bullish tilt towards the market and continue to believe there is money to be made over the coming quarters. While a period of further consolidation cannot be ruled out, a drawdown would be viewed as healthy as it would likely set the stage for the next leg higher. Our view is that as long as the economy and earnings continue to grow – which remains our base-case scenario—equity prices should ultimately follow suit.
The Week Ahead: The focal point of the coming week will be the Federal Open Market Committee (FOMC) meeting on Tuesday and Wednesday. While no changes in rates are expected, investors will be looking for an update on the committee’s plans to complete the normalization of their balance sheet. The after-meeting communique will be released on Wednesday at 2:00 p.m. Eastern Time. Chairman Powell will follow with a press conference at 2:30 p.m. Highlights of the data calendar include; the March housing market index on Monday, January factory orders on Tuesday, the Philly Fed’s March business outlook survey on Thursday, and February existing homes sales on Friday.
The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally defined as the leaders in their industry. It has been a widely followed indicator of the stock market since October 1, 1928.
Wilshire 5000 Total Market IndexSM represents the broadest index for the U.S. equity market, measuring the performance of all U.S. equity securities with readily available price data. The index is comprised of virtually every stock that: the firm's headquarters are based in the U.S.; the stock is actively traded on a U.S. exchange; the stock has widely available pricing information (this disqualifies bulletin board, or over-the-counter stocks). The index is market cap weighted, meaning that the firms with the highest market value account for a larger portion of the index.
Standard and Poor's 500© Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
The NASDAQ Composite Index is a broad-based capitalization-weighted index of stocks in all three NASDAQ tiers: Global Select, Global Market and Capital Market. The index was developed with a base level of 100 as of February 5, 1971.
This material contains opinions of the author, but not necessarily those of Guggenheim Partners, LLC or its subsidiaries. The opinions contained herein are subject to change without notice. Forward looking statements, estimates, and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources believed to be reliable, but are not assured as to accuracy. Past performance is not indicative of future results. There is neither representation nor warranty as to the current accuracy of, nor liability for, decisions based on such information. No part of this material may be reproduced or referred to in any form, without express written permission of Guggenheim Partners, LLC.
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*Assets under management is as of 6.30.2019 and includes leverage of $11.2bn. Guggenheim Investments represents the following affiliated investment management businesses of Guggenheim Partners, LLC: Guggenheim Partners Investment Management, LLC, Security Investors, LLC, Guggenheim Funds Investment Advisors, LLC, Guggenheim Funds Distributors, LLC, GS GAMMA Advisors, LLC, Guggenheim Partners Europe Limited and Guggenheim Partners India Management. Securities offered through Guggenheim Funds Distributors, LLC, an affiliate of Guggenheim, SI, GFIA and GPIM.
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