The stock market is off to a great start as prices climbed for the second straight month in February. The 11.3% return experienced to date is the 5th strongest start to a year on record.
The bullishness was likely the result of promising US-China trade talks, a more dovish stance being communicated from the Federal Reserve and the end to the partial government shutdown. While the shutdown served to depress household and corporate sentiment in January, economic indexes such as the ISM Non-Manufacturing and other readings in February improved seeming to suggest the economic expansion remains intact.
During February, small cap stocks outperformed their large cap peers and growth outperformed value.
Notable Market and Economic Happenings:
- Economic growth came in at a healthy 2.6% quarter-over-quarter in Q4 2018 extending the streak of >2% growth quarters to 7.
- 90% of S&P 500 companies are trading above their 50-day moving average signaling strong market breadth.
- Through late February, the S&P 500 has been up 73% of trading days. The seven prior years with similar strength saw gains the remainder of the year every time.
- The deadline for the UK leaving the European Union (i.e., Brexit) is approaching (March 29th ). While many believe the deadline will be extended, the uncertainty could result in market uncertainty toward the end of the month.
Inspirational Thought for the Day:
“When you decide to become a means to an end, your money will become a means to an end also.” – Andy Stanley