The U.S. stock market finished the week lower after dropping nearly 2.00% on Friday amid fears of a global economic slowdown. Interest rates also fell as the 10-year treasury yield dropped 14 basis points to 2.45%, while the spread between the 10-year treasury yield and the 2-year treasury yield narrowed by three basis points to 0.14%. The price of gold rose 0.82% to $1,313 an ounce amid the Fed’s decision to leave interest rates unchanged. The U.S. dollar index (DXY), which typically moves inversely to the price of gold, also rose from 96.49 to 96.64 as global worries outweighed the Fed’s decision to leave interest rates unchanged. The price of crude oil rose a slight 0.82% to $58.86 a barrel, despite concerns on global growth.
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This Week’s Economic Highlights
- U.S. factory orders increased a slight 0.1% in January as compared to the 0.4% increase expected. Of the factory orders, durable goods (i.e. products meant to last at least three years) increased by 0.3% but was offset by a 0.5% decrease in nondurable goods.
- The U.S. Federal Reserve made the unanimous decision to leave interest rates unchanged at the 2.25% to 2.5% range. Federal Reserve Chairman Jerome Powell stated that interest rate hikes could be on hold for “some time” as inflation poses little threat and global risk weighs on the economic outlook. As it currently stands, analysts expect no rate hikes for the remainder of 2019 and only one in 2020.
- Initial unemployment claims fell by 9,000 for the week ending March 16th to a total of 221,000 while the more stable four-week average only fell by 1,000 to 225,000. Continuing unemployment claims, which lag initial claims by a week, fell by 27,000 to a total of 1.7 million.
- The Philadelphia Fed Business Activity Index rebounded to 13.7 in March after dropping below zero in February for the first time since May of 2016. (Any reading above zero indicates improving conditions.)
- Existing-home sales reached an 11-month high in February after jumping 11.8% to a seasonally-adjusted annual rate of 5.51 million. Despite the large monthly increase, existing-home sales are still down 1.8% from a year ago. The median sales price of existing-homes is up 3.6% higher than a year ago at $249,000.
“The market’s not a very accommodating machine; it won’t provide high returns just because you need them.”
– Peter Bernstein