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HA – Economic Factors That Moved the Market in March 2019

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Markets overall showed signs of stabilization following the Federal Reserve’s shift toward a more dovish stance. Fourth quarter real GDP clocked some growth at 2.2%, though lower than the initial 2.6% growth expected in February. Uncertainties over tariffs and the trade dispute with China continue to exert pressure on growth prospects. The question that seems to be on most investors’ minds is whether the economy may be slipping into recession in the coming months, particularly in light of the fact that the 10-year Treasury yield slipped below the 3-month yield for the first time since 2007, a key Fed indicator whose inversion has historically signaled a potential recession on the horizon.

DJIA Daily Chart from March 1 to March 29, 2019

March 1

  • Personal income jumped up 1% higher in December, beating 0.4% consensus.
  • ISM Mfg Index came in within expectations at 54.2.
  • Consumer Sentiment at 93.8 appeared to jump up at the end of the government shutdown though below consensus expectations of 95.7.

March 4

  • Indices advanced due to growing optimism that the U.S. and China will reach a trade agreement later this month.
  • December construction spending, however, fell -0.6%, below the minimum -0.3% consensus floor, a three-year low for the index.

March 5

  • Home sales jumped 3.7% in December to a 621,000 annual rate that is on the upper range of expectations.
  • Indices remained somewhat steady despite news that China cut its growth target for 2019 to a 30-year low.

March 6

  • Indices are lower after the Organization for Economic Co-Operation and Development lowered forecasts again for the global economy in 2019 (3.3%) and 2020 (3.4%)

March 7

  • Dow drops more than 200 points, heads for 4-day slide after ECB cuts growth forecast.
  • The number of U.S. workers filing new applications for unemployment benefits were down slightly last week. Initial jobless claims declined 3,000 to 223,000 in the week ended March 2. Economists had forecast 221,000 new applications for jobless benefits last week.

March 8

  • Indices declined in the overnight trade on news that China’s exports tumbled by the most in three years in February, while imports fell for the third consecutive month.
  • Housing starts increased 18.6% in January from the prior month to an annual rate of 1.230 million. Residential building permits rose 1.4% from December to an annual pace of 1.345 million. Economists had expected a 9.5% increase for starts and a 2.7% decrease for permits.

March 11

  • Stock indices across the globe rebounded on China stimulus hopes.
  • China’s central bank on Sunday pledged to further support the slowing Chinese economy by increasing loans and lowering borrowing costs.
  • S. retail sales unexpectedly increased in January. The Commerce Department said retail sales rose 0.2% when economists had forecast retail sales to be unchanged.

March 12

  • S. consumer prices increased in February, as energy and food prices picked up, although the broader trend suggested inflationary pressures remain relatively tame.
  • The consumer price index (CPI) came in at 0.2% in February, as anticipated.

March 13

  • The U.S. producer price index (PPI), which measures the prices businesses receive for their goods and services, increased 0.1% in February from a month ago. The median estimate called for a .2% increase.
  • S. durable goods orders increased 0.4% in January, its third consecutive monthly gain. Economists expected a 0.6% decline.

March 14

  • Indices were under pressure overnight as news broke that the meeting between President Donald Trump and Chinese President Xi Jinping will be delayed until ate least April.
  • Initial jobless claims came in at 229,000 in the week ended March 9, an increase of 6,000. Economists forecasted a figure of 224,000 new applications.
  • Prices of imported goods rose 0.6% in February from the previous month, higher than the 0.4% increase that economists were expecting.

March 15

  • Indices advanced again on renewed US-China trade hopes.
  • The New York Federal Reserve’s Empire State Business Conditions index fell to 3.7 in March from 8.8, the lowest level it had seen in nearly two years.
  • February industrial production increased 0.1%, lower than the analyst-anticipated 0.4% gain.
  • Consumer sentiment beat expectations with a 97.8 reading; economists were expecting 95.2.
  • Job openings in January rose to 7.581 million, higher than the forecasted 7.2 million that analysts were expecting.

March 18

  • Global indices rise to the highest level in five months, with the S&P 500 and Nasdaq posting the strongest weekly gains this year.
  • Housing market recovery was tame, the index coming in at 62, below the 63 forecast yet within consensus range,

March 19

  • Indices traded higher though fell back as investors are expecting the Fed to take a more accommodative position during tomorrow’s FOMC announcement.
  • No major news behind today’s trading.

March 20

  • Dow drops more than 100 points, led by banks, after the Fed signals no rate hikes this year.
  • The market response appears to be a “buy the rumor, sell the fact” as stocks rose ahead of the FOMC announcement only to fall back after the Fed had made clear its dovish stance toward monetary policy.

March 21

  • The Philadelphia Federal Reserve manufacturing index was 13.7, significantly higher than the expectations of 4.6.
  • S. jobless claims fell 9,000 to 221,000 in the week ended March 16, as layoffs showed no sign of rising. Consensus expectations called for initial claims to be 225,000.

March 22

  • Indices fell on weak economic reports from Europe.
  • The EU purchasing managers indexes came in below expectations, dragged down by weak performances in Germany and France.
  • Home sales jumped to 5.5 million, higher than the anticipated 5.1 million.

March 25

  • Indices dipped lower as global growth worries outweigh the positive outcome for President Donald Trump regarding the Mueller report.
  • Better-than-expected economic data from Germany and optimism regarding the US-China may result in a trade deal in April may have supported today’s market.
  • The Chicago Federal Reserve national activity index in February came in at a negative 0.29, far below the 0.10 figure that economists expected.

March 26

  • Indices surged on very limited market news.
  • Despite the weak housing market report, indices seemed to be holding up
  • Housing starts fell 8.7% in February to an annual rate of 1.162 million when 1.201 million was expected.

March 27

  • Fears of a global economic slowdown may have caused today’s market decline.
  • China’s industrial profits shrank by 14%, a rate not seen since 2011.
  • The bearish impact may have been slightly buffered by hopes that a trade deal might be reached in April.

March 28

  • Indices are higher following reports that the US-China trade talks may be seeing significant progress.
  • GDP in the fourth quarter came in at the expected annualized rate of 2.2%.
  • Consumer spending fell to 2.5% from 2.8%.
  • Jobless claims fell by 5,000 to 211,000 in the week ending March 23; lower than the expected number of 220.000 claims.

March 29

  • Markets are up once again following positive reports on the US-China trade talks.
  • Personal consumption expenditures rose by 0.1% in January from the prior month, still below expectations of a 0.3% rise.
  • Despite fears of a slowing global economy, the S&P 500 has gained 12.3% this quarter, its best quarterly performance since September 2009.

 

Karl Montevirgen

Market Strategist | Halifax America

 

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