Weekly Market Recap

Week ended February 9

Market-moving news

Market-moving news

Market-moving news
Correction time

On the heels of the previous week’s drop of around 4%, U.S. stock indexes recorded an even steeper decline. The S&P 500 and the Dow fell more than 5%, erasing their previous year-to-date gains and then some, leaving the indexes near their levels of more than two months ago. The sell-off marked the first correction—a decline of 10% or more—since February 2016.

Market-moving news
Volatility spike

The Cboe Volatility Index, which measures investors’ expectations of near-term stock market volatility, climbed to levels last seen in September 2011, when Congress struggled to lift the nation’s debt ceiling. However, the VIX didn’t come close to its levels during the worst stretch of the global financial crisis; on Monday, the VIX closed at a weekly high of 37, versus a record of almost 81 on November 20, 2008.  

 

Market-moving news
Global slump

The turmoil in the U.S. stock market extended overseas. A key European index declined more than 6% for the week to its lowest level since last August. Some Asian markets joined the U.S. in a correction, with declines of at least 10% from levels reached in late January. Following the U.S. market’s big decline on Thursday, a Chinese index plunged more than 4% on Friday.

Market-moving news
Yield support

After rising sharply in the previous week, government bond yields were relatively stable, as the yield of the 10-year U.S. Treasury bond hovered close to a four-year high of around 2.85%. The relatively high yields were supported by several factors: accelerating growth, inflation concerns, and worries that a new federal budget agreement will increase the deficit, expanding the nation’s borrowing needs.  

Market-moving news
Budget pressures

One of the sources of volatility was the difficult path that Congress took in agreeing on a budget bill that was approved early Friday, ending a government shutdown that lasted only a few hours. In addition to extending government funding through March 23, the measure will boost spending over the next two years, increasing the nation’s deficit.   

Market-moving news
Oil reversal

New concerns about an oversupply sent crude oil prices below the $60-per-barrel level that they had breached at the end of last year. For the week, prices fell more than 9%, the biggest weekly drop since November 2016.  

Scary week

Coming after 2017’s low volatility, the week’s market movements were truly outsized. Historically, the Dow’s daily declines were modest in percentage terms, but the point drops were mammoth—1,175 on Monday and 1,033 on Thursday. Wednesday’s decline was a mere 19 points. It wasn’t all down—the Dow gained 567 on Tuesday and 330 on Friday.

CPI ahead

A Consumer Price Index report scheduled to be released on Wednesday could move markets. CPI is the most common measure of inflation, and rising prices and wages have contributed to market volatility, in part due to concerns that the U.S. Federal Reserve could accelerate the pace of interest-rate increases.

The week ahead: February 12-16

Monday

  • Federal budget, U.S. Department of the Treasury

Tuesday

  • No major reports scheduled

 

 

Wednesday

  • Consumer Price Index, U.S. Bureau of Labor Statistics
  • Retail sales, business inventories, U.S. Census Bureau

Thursday

  • Producer Price Index, U.S. Bureau of Labor Statistics
  • Industrial production and capacity utilization, U.S. Federal Reserve

Friday

  • Housing starts, U.S. Census Bureau
  • U.S. import and export price indexes, U.S. Bureau of Labor Statistics
  • University of Michigan Index of Consumer Sentiment, preliminary result
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. 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.

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 2/9/18
1 week
-5.3-5.1-4.9 Large
-4.7-4.8-4.9 Mid
-4.2-4.5-4.7 Small
Value Core Growth
YTD
-3.5-2.0-0.5 Large
-4.6-3.3-1.6 Mid
-4.7-3.7-2.8 Small
Value Core Growth
Index/market total returns as of 2/9/18 (%)
Close Week YTD
Dow Jones Industrial Average 24,190.9 -5.1 -1.9
NASDAQ Composite Index 6,874.5 -5.0 -0.3
S&P 500 Index 2,619.6 -5.1 -1.8
MSCI EAFE Index 1,992.3 -6.2 -2.8
International/developed (%)
1 week YTD
EAFE -6.2 -2.8
Europe -6.5 -3.4
France -6.6 -2.2
Germany -6.5 -4.1
Italy -5.9 3.8
Japan -5.3 -0.7
Spain -7.1 -1.3
Switzerland -6.5 -4.1
U.K. -6.7 -5.7
Emerging markets (%)
1 week YTD
EM -7.1 -1.3
Brazil -5.8 7.0
China -10.0 -0.9
India -2.7 -2.8
Indonesia -2.8 0.4
Korea -7.6 -7.2
Mexico -6.6 0.8
Russia -7.0 4.1
Taiwan -7.9 -0.6
S&P 500 sectors (%)
1 week YTD
S&P 500 Index -5.1 -1.8
Consumer discretionary -4.6 2.3
Consumer staples -5.1 -5.7
Energy -8.1 -7.6
Financials -5.8 -0.8
Healthcare -5.6 -0.6
Industrials -5.4 -2.5
Information tech -4.3 -0.1
Materials -3.4 -3.4
REITs -4.1 -8.6
Telecom -5.7 -5.4
Utilities -2.6 -7.8

Fixed income, currencies, and commodities

U.S. fixed-income style total returns (%) as of 2/9/18
1 week
0.10.3-0.6 Large
0.20.1-1.7 Mid Quality
-0.7-1.4-2.2 Small
Value Core Growth
INTEREST RATE SENSITIVITY
YTD
0.1-1.0-6.3 Large
-0.2-1.3-3.9 Mid Quality
-0.1-1.2-1.2 Small
Value Core Growth
INTEREST RATE SENSITIVITY
U.S. Treasury bond yields as of 2/9/18 (%)
END OF WEEK PRIOR WEEK
2 Yr 2.05 2.15
10 Yr 2.82 2.85
30 Yr 3.13 3.09
2-10 spread 0.77 0.70
10-30 spread 0.31 0.24
U.S. bond sector total returns (%)
1 week YTD
Aggregate -0.1 -1.9
Bank loans -0.4 0.6
Convertible -3.7 -1.9
Corporate -0.5 -2.7
High yield -1.4 -1.2
MBS 0.0 -1.8
Municipal 0.2 -1.4
Preferreds 0.5 -2.2
TIPS -0.5 -2.0
Treasury 0.1 -1.9
Global bond total returns (%)
1 week YTD
EM Local -1.9 2.0
EMD USD -1.9 -2.5
Global Agg -0.4 0.0
Global Agg Ex-U.S. -0.6 1.2
Multiverse -0.5 0.0
Commodities (%)
1 week YTD
BBG Com Ind -3.9 -2.7
Oil -9.5 -1.9
Gold -1.6 0.3
Currencies (USD) (%)
1 week YTD
EM FX -1.0 1.4
AUD -1.8 -0.3
CAD -1.8 -0.7
CHF -0.9 3.6
EUR -1.5 2.0
GBP -2.2 2.1
JPY 1.6 3.6

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 1/31/18

as tracked by Strategic Insight
MONTH 12 Month ASSETS
U.S. equity 13.8 14.4 8,097.2
Sector equity 6.1 20.7 915.3
Allocation -3.2 -27.8 1,321.0
International equity 43.0 262.2 3,417.3
Alternative 4.6 8.2 222.7
Commodities 1.9 6.1 96.5
Taxable bond 46.5 414.0 3,631.2
Municipal bond 8.0 37.0 699.5
Total all long-term funds 120.6 708.8 18,419.2

Leading Morningstar fund categories by monthly net flows ($B) as of 1/31/18

MONTH 12 Month ASSETS
Large blend 25.2 116.9 3,335.1
Intermediate-term bond 24.4 173.6 1,374.5
Foreign large blend 15.2 140.5 1,265.9
Diversified emerging markets 13.1 61.1 615.6
Muni national interm 6.1 24.1 213.2

Lagging Morningstar fund categories by monthly net flows ($B) as of 1/31/18

MONTH 12 Month ASSETS
Large value -3.8 -34.0 1,260.5
High-yield bond -3.7 -22.8 302.4
Large growth -3.5 -49.0 1,694.0
Real estate -2.2 0.6 151.8
Mid-cap value -2.0 -9.6 267.4
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. 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.

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.

Hide disclosure