A strong Friday rally lifted the Dow and S&P 500 into the green for the week. The Dow gained 0.4% while the S&P 500 increased 0.6%. The indices have recovered roughly 2/3rd of the value lost in the early February correction. Interest rates held steady this week ahead of incoming Fed Chairman Jerome Powell’s first report to Congress, scheduled for Tuesday. The market will be listening closely to his comments to get a sense of where interest rate policy is going. While many believe Powell holds similar views to outgoing Chairman Janet Yellen, this will be an important time for his to outline his plan on managing monetary policy, interest rates and reducing the Fed’s $4.5 trillion balance sheet. Most market participants are expecting the Fed to increase rates 0.75% over the course of the year through three separate 0.25% increases.
It was an eventful week in the retail sector. Walmart reported disappointing earnings Tuesday morning and its stock declined almost 13% by Wednesday afternoon. Most concerning to investors is the slowing growth in the online business, a focal point for Walmart in its competition with Amazon. Online sales grew almost 25%, but that was down from 50% growth last quarter. It was the largest one-day percentage drop since 1988. It’s not common to see a company as large as Walmart move that much in one day. Walmart’s market value declined $35 billion this week. Read More
Upscale retailer Nordstrom is reportedly trying to be taken private by the Nordstrom family. Nordstrom became a publicly-traded company in 1978, but the family has remained central to the business. The family currently owns approximately 30% of the company and apparently believes they will be in a better position to run the business in a challenging retail environment without the pressures and costs of being a public company. The family is attempting to get a deal announced before Nordstrom is scheduled to release 4th quarter earnings next week. Read More
Oil increased 3.1% this week to close at $63.55/barrel. The yield on the 10-yr Treasury held steady at 2.87%. The average rate on a 30-yr fixed rate mortgage moved higher again to 4.40% from 4.38% a week ago.