Weekly Market Recap

Week ended January 11

Market-moving news

Market-moving news

Market-moving news
Solid start

The major stock indexes climbed 2%–3% during the first full week of the new year, marking the third positive weekly result in a row. The Dow ended the week 10% higher than its recent low on December 24, while the S&P 500 was more than 7% higher. 

Market-moving news
Baby steps

December’s surge in market volatility has given way to incremental gains entering the new year. Stocks rose modestly in six of the first eight trading days of 2019, and Friday’s small decline snapped a five-day string of positive days in a row. 

Market-moving news
Earnings outlook

Major banks will begin reporting results next week as quarterly earnings season gets under way. Economic and trade uncertainties have recently caused analysts to scale back their profit estimates, and fourth-quarter earnings for companies in the S&P 500 are now expected to rise about 12% compared with the same quarter a year ago, according to FactSet. 

Market-moving news
Holiday shopping disappointment

Shares of Macy's and Kohl's fell sharply on Thursday after the department store chains reported December sales figures that were below expectations. Despite an environment of strong consumer confidence, many traditional retail chains continue to face headwinds as more spending shifts online.

Market-moving news
Inflation slowdown

The government reported on Friday that the U.S. Consumer Price Index slipped 0.1% in December, marking the first decrease in nine months. Declining gasoline prices were a key reason for the monthly decrease, as they offset increases in rental housing and healthcare costs. 

Market-moving news
High-yield drought ends

Recent market volatility has slowed issuance of corporate bonds, and new sales of high-yield bonds were halted altogether. An energy company’s sale of below-investment-grade debt on Thursday ended a 40-day period in which no high-yield bonds were issued in the U.S. market. It was the longest such drought since 1995, according to Dealogic.

Shutdown stagnation

The latest week’s stock market gains came despite the lack of a resolution to the partial government shutdown, which became the longest in U.S. history on Saturday. As the shutdown entered its fourth week, there was no immediate sign of a break in the impasse between President Trump and Democratic leaders in the House over spending and border security.

Missing data

Many U.S. economic reports that were expected to be released have been delayed indefinitely as a result of the shutdown’s impact on government agencies, introducing a new element of uncertainty into financial markets. One notable exception is the Department of Labor’s Bureau of Labor Statistics, which has continued to release employment and inflation data because it—unlike other key agencies—is funded through September 2019. 

The week ahead: January 14-18

Monday 

  • No major reports scheduled

 

 

 

Tuesday

  • Producer Price Index, U.S. Bureau of Labor Statistics

 

Wednesday

  • Retail sales, U.S. Census Bureau*
  • Business inventories, U.S. Census Bureau*
  • Export and import prices, U.S. Bureau of Labor Statistics
  • Housing Market Index, National Association of Home Builders

Thursday

  • Housing starts, U.S. Census Bureau*

Friday

  • Industrial production and capacity utilization, U.S. Federal Reserve
  • University of Michigan Index of Consumer Sentiment, preliminary result

Important disclosures

* Due to the ongoing U.S. government partial shutdown, status of report’s issuance was uncertain as of 1/14/19.

Unless otherwise noted, all data is from FactSet.

The data provided is for informational purposes only and is not an endorsement of any security, mutual fund, sector, or index. This does not illustrate the performance of any John Hancock fund. The information contained here is not guaranteed as to accuracy or completeness. All economic and performance information is historical and does not guarantee future results.

The Dow Jones Industrial Average is a price-weighted index comprising 30 widely traded blue chip U.S. common stocks. The NASDAQ Composite Index is a market-value-weighted index of all common stocks listed on the NASDAQ stock exchange. The S&P 500 Index tracks the performance of 500 of the largest publicly traded companies in the United States. The MSCI Europe, Australasia, and Far East (EAFE) Index tracks the performance of publicly traded large- and mid-cap stocks of companies in those regions. The Cboe Volatility Index (VIX) shows the market’s expectation of 30-day volatility and is constructed using the implied volatilities of a wide range of S&P 500 Index options. Weekly and year-to-date figures for the VIX show percentage changes, not investment returns. It is not possible to invest directly in an index.

The Treasury yield curve is derived from available U.S. Treasury securities trading in the market and is provided directly by the U.S. Federal Reserve. The spread measures the difference in yield between two government securities. A normal (positive) yield curve occurs when longer-term rates are higher than shorter-term rates. The opposite holds true for an inverted yield curve. Year-to-date changes in U.S. Treasury bond yields are shown in basis points (BPS).  One hundred basis points equals one percent.

Oil prices are represented by West Texas Intermediate (WTI) crude oil.

The G20 countries comprise a mix of the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85% of global gross domestic product, and over 75% of global trade.

 

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Investment returns

Equities

U.S. equity size and style total returns (%) as of 1/11/19
1 week
2.42.83.2 Large
3.84.24.7 Mid
4.14.85.6 Small
Value Core Growth
YTD
3.83.94.0 Large
5.45.35.3 Mid
7.27.47.5 Small
Value Core Growth
Index/market total returns as of 1/11/19 (%)
Close Week YTD
Dow Jones Industrial Average 23,996.0 2.4 2.9
NASDAQ Composite Index 6,971.5 3.5 5.1
S&P 500 Index 2,596.3 2.6 3.6
MSCI EAFE Index 1,786.1 2.9 3.9
Cboe Volatility Index 18.2 -15.0 -28.3
International/developed (%)
1 week YTD
EAFE 2.9 3.9
Europe 2.2 3.7
France 1.8 1.7
Germany 1.8 3.9
Italy 2.7 5.7
Japan 4.1 4.0
Spain 2.3 4.8
Switzerland 2.8 4.9
U.K. 2.0 3.6
Emerging markets (%)
1 week YTD
EM 3.8 3.7
Brazil 2.3 11.4
China 5.1 4.2
India -0.3 -1.8
Indonesia 3.7 5.8
Korea 4.8 2.0
Mexico 4.4 7.7
Russia 3.1 7.7
Taiwan 5.0 -0.3
S&P 500 sectors (%)
1 week YTD
S&P 500 Index 2.6 3.6
Communication services 2.3 6.3
Consumer discretionary 3.7 6.0
Consumer staples 0.7 1.6
Energy 3.4 8.1
Financials 1.0 2.9
Healthcare 2.3 1.6
Industrials 4.1 5.4
Information tech 3.4 2.6
Materials 1.9 3.4
Real estate 4.0 3.2
Utilities 0.8 0.6

Fixed income, currencies, and commodities

U.S. fixed-income style total returns (%) as of 1/11/19
1 week
0.0-0.1-1.0 Large
0.00.00.8 Mid Quality
0.91.92.7 Small
Value Core Growth
INTEREST RATE SENSITIVITY
YTD
0.10.0-0.2 Large
0.00.11.2 Mid Quality
1.63.24.2 Small
Value Core Growth
INTEREST RATE SENSITIVITY
U.S. Treasury bond yields as of 1/11/19 (%)
END OF WEEK PRIOR YEAR END YTD CHANGE (BPS)
2 Yr 2.55 2.48 +7
10 Yr 2.70 2.69 +1
30 Yr 3.03 3.02 +1
2-10 spread 0.15 0.21 -6
10-30 spread 0.34 0.33 +1
U.S. bond sector total returns (%)
1 week YTD
Aggregate 0.0 0.2
Bank loans 0.9 3.0
Convertible 3.2 4.3
Corporate 0.4 0.6
High yield 1.9 3.2
MBS 0.0 0.2
Municipal 0.0 0.3
Preferreds 0.8 3.5
TIPS 0.2 0.7
Treasury -0.3 0.0
Global bond total returns (%)
1 week YTD
EM Local 0.6 2.1
EMD USD 0.7 1.7
Global Agg 0.2 0.6
Global Agg Ex-U.S. 0.3 0.9
Multiverse 0.2 0.7
Commodities (%)
1 week YTD
BBG Com Ind 1.7 3.9
Oil (WTI) 7.6 13.6
Gold 0.3 0.7
Currencies (USD) (%)
1 week YTD
EM FX 0.8 1.8
AUD 1.4 2.3
CAD 1.0 3.0
CHF 0.3 0.3
EUR 0.60 0.4
GBP 0.81 0.7
JPY -0.26 1.2

U.S. economy

GDP

Jobs

Inflation

Ex-U.S.

Regions/countries

Fund industry overview

Total net flows: open-end funds and ETFs ($B) as of 11/30/18

as tracked by Strategic Insight
MONTH 12 Month ASSETS
U.S. equity 11.0 4.1 7,922.5
Sector equity -5.0 -11.4 864.8
Allocation -8.7 -57.0 1,225.2
International equity 7.3 117.8 2,958.0
Alternative -2.7 -6.7 194.2
Commodities -0.8 1.9 85.7
Taxable bond -3.7 196.3 3,695.5
Municipal bond -3.3 7.1 701.6
Total all long-term funds -10.2 215.4 17,665.2

Leading Morningstar fund categories by monthly net flows ($B) as of 11/30/18

MONTH 12 Month ASSETS
Large Blend 18.3 65.2 3,404.7
Ultrashort Bond 13.3 84.3 218.0
Diversified Emerging Mkts 6.0 27.4 507.7
Short Government 5.4 10.8 57.3
Foreign Large Blend 2.3 98.5 1,082.8

Lagging Morningstar fund categories by monthly net flows ($B) as of 11/30/18

MONTH 12 Month ASSETS
Intermediate-Term Bond -7.1 49.1 1,374.1
Large Growth -5.6 -36.9 1,644.6
Bank Loan -5.0 10.2 143.8
World Allocation -3.8 -17.3 285.9
High Yield Bond -3.2 -33.4 266.7
Important disclosures

Unless otherwise noted, all data is from FactSet.

The data provided is for informational purposes only and is not an endorsement of any security, mutual fund, sector, or index. This does not illustrate the performance of any John Hancock fund. The information contained here is not guaranteed as to accuracy or completeness. All economic and performance information is historical and does not guarantee future results.

The Dow Jones Industrial Average is a price-weighted index comprising 30 widely traded blue chip U.S. common stocks. The NASDAQ Composite Index is a market-value-weighted index of all common stocks listed on the NASDAQ stock exchange. The S&P 500 Index tracks the performance of 500 of the largest publicly traded companies in the United States. The MSCI Europe, Australasia, and Far East (EAFE) Index tracks the performance of publicly traded large- and mid-cap stocks of companies in those regions. The Cboe Volatility Index (VIX) shows the market’s expectation of 30-day volatility and is constructed using the implied volatilities of a wide range of S&P 500 Index options. Weekly and year-to-date figures for the VIX show percentage changes, not investment returns. It is not possible to invest directly in an index.

The Treasury yield curve is derived from available U.S. Treasury securities trading in the market and is provided directly by the U.S. Federal Reserve. The spread measures the difference in yield between two government securities. A normal (positive) yield curve occurs when longer-term rates are higher than shorter-term rates. The opposite holds true for an inverted yield curve. Year-to-date changes in U.S. Treasury bond yields are shown in basis points (BPS).  One hundred basis points equals one percent.

Oil prices are represented by West Texas Intermediate (WTI) crude oil.

The G20 countries comprise a mix of the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85% of global gross domestic product, and over 75% of global trade.

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