DAILY MARKET RECAP – March 18, 2019
• S&P 500 up 0.37% at 2,832.94
• DJIA up 0.25% to 25,914.10
• NASDAQ up 0.34% to 7,714.48
• Russell 2000 0.67% to 1,563.93
• U.S. 10-yr flat at 2.6%
• WTI Oil up 0.75% at $58.96
Markets rose today for a 4-day winning streak, although the DJIA lagged the rest of the market by Boeing once again after news that data from the Ethiopian Air jet suggests similarities with the crash in Indonesia last year. Cyclical sectors took the lead today, with Energy, Financials and Consumer Discretionary stocks rising the most, while more defensive sectors such as Utilities, Real Estate and Healthcare lagged. Investors are preparing themselves for a busy week as the Fed begins its 2-day monetary policy meeting tomorrow. It is widely expected that the Fed will keep rates the same, but investors and analysts will dissect the Fed’s “dot plot” of interest rate projections as well as any new information around when the balance sheet reduction will cease. The chief US equity strategist at Credit Suisse hiked his 2019 target on the S&P 500, citing receding risks and potential for resolution with China as the main drivers. The U.S. 10-Year Treasury yield was unchanged at 2.6%, while WTI crude oil rose by 0.75%.
Housing Market Index (March) – 62 vs. 63 Expected
Increasing recovery for the housing market index failed to extend as expected in March, although the index held February’s level. Traffic held back the report at a 4 point loss from February, underscoring growing concern in the housing sector that sales are being driven by high-end buyers. Other buyers, especially first-time buyers, do not appear to be showing increased interest in new homes. Current sales and 6-month sales were up and are at their best since October 2018. Composite scores are strongest in the South and West, with the Northeast and Midwest were much lower, but flat. The 2019 outlook is guarded, given this data point, despite the lowest mortgage rates in a year.
Boeing – Boeing shares slipped more than 2% after the WSJ reported that federal prosecutors and the Department of Transportation are scrutinizing the development of the company’s 737 Max jets. Black box data from the Ethiopian Airlines jet shows clear similarities between the Ethiopia crash and Indonesia crash.
Facebook – Shares of Facebook fell 3% after an analyst at Needham downgraded them to hold from buy. In a note to clients, the analyst warned of higher regulatory risk and that Facebook’s pivot to privacy could hurt the stock. In addition, she said that recent senior management defections could create a negative network effect and lead to “a continued management exodus”. The analyst believes, however, that Facebook is capable of keeping the network effect from swinging negative. Additionally, Facebook’s transition to more private, encrypted messaging will change its business model, but management believes that it will not be at the expense of its traditional News Feed.
• Factory Orders
All estimates come from Econoday’s survey of economists/analysts. Earnings per share estimates are from Factset, are set against year ago results, and represent adjusted earnings.