Stocks ended a positive week on a disappointing note, as investors, once again, elected to trim equity positions ahead of the weekend.  Policy concerns appear to outweigh favorable economic and financial fundamentals at present, as the balance of commentary below will attest.

The S&P 500 closed the week at 2588.26, slightly above the 2581.00 low on February 8 but down -9.91% from the January 26 closing high.  A “retest” of the February low was expected by many market technicians, including Via Nova, and so was not completely unexpected.  Importantly, the S&P 500 closed nearly on top of its 200-day moving average, which has been widely viewed as the bottom channel in the current bull market.  So, while market confidence is being tested, technical support levels are holding… for now.

HIGHLIGHTS

Stocks struggled against some disappointing economic reports and political turmoil.

A tale of two economies?

Will we have 20% earnings growth in 2018?

Tariff tone and Trump team turnover.

The Fed takes center stage in the coming week.  Jerome Powell holds his first press conference as Chairman.  Will we see “rookie” mistakes in the Q&A?

HIGHLIGHTS:

The current bull market celebrated its ninth anniversary.  The NASDAQ posted a record close.

Softer tariffs, new talks with North Korea and stronger job growth helped lift stocks.

A few snippets on fourth quarter earnings.

Trump two-fer: Trade tariffs were less severe than expected, and Trumps agrees to attend unprecedented talks with North Korea.

Watch for the February CPI report due Tuesday.

HIGHLIGHTS

• Stocks snapped a two-week winning streak, as monetary and fiscal policy announcements grabbed center stage.  The S&P 500 closed in the middle of the recent trading range.
• The new Fed Chairman raised market concerns of the possibility of four rate hikes instead of three, and President Trump announced plans to impose 10% and 25% tariffs on aluminum and steel, respectively.
• The economic backdrop remained solid, with better than expected personal income growth, but also accelerating inflation.
• Coming Week: The “tariff tantrum” debate will likely continue and raise market concerns about global retaliation.  It’s also jobs week, and the market is looking for a 200,000 increase in payrolls with a modest drop in the unemployment rate to a new cycle low.

HIGHLIGHTS:

• Fed to the rescue again: Stocks finished a rollercoaster ride on the plus side, helped by a favorable Monetary Policy Report on Friday.
• Mostly positive news in a light economic calendar.
• Q4 earnings reports winding up on a very healthy note.
• Coming Week: A full calendar of economic reports, but new Fed Chair Jerome Powell’s Congressional testimony scheduled for Tuesday and Thursday will be the focus for markets.

HIGHLIGHTS

• Stocks rebounded following the rough previous week, shrugging off inflation concerns, but bond yields continued to rise.
• A higher than expected CPI was the dominant statistic in a full economic calendar.
• Q4 earnings reports continued to exceed expectations. Record upward revisions.
• Policy: Trump’s 2019 Budget proposal totals $4.4 trillion and focuses on defense and border security.  However, it does not balance over the next 10 years even under optimistic assumptions.
• February 15th was the official deadline for companies to adopt the new federal tax withholding tables. 
• Coming Week: Monday holiday, a lighter economic calendar, and earnings season begins to wind down.

HIGHLIGHTS

• Another rocky week sent the S&P 500 briefly into correction territory.
• A light week of economic news.
• Q4 earnings reports continued to exceed expectations
• Policy: A government shutdown ended before it began thanks to a two-year budget deal.
• Coming Week: Trump's budget proposal, more earnings reports, inflation data and retail sales for January.