Weekly Market Recap

Week ended January 12

Market-moving news

Market-moving news

Market-moving news
Upward momentum

The major stock indexes couldn’t match the strength of their opening week of 2018, but they still put up some impressive numbers and set new record highs. The Dow and the NASDAQ both gained around 2.0% for the week, with the S&P 500 adding around 1.6%.

Market-moving news
Strong start

Just two weeks into the new year, the NASDAQ is up more than 5% while the Dow and S&P 500 are both up more than 4%. The Dow breached the 25,000-point level for the first time on January 4, and it finished the latest week just 197 points shy of 26,000.    

Market-moving news
Earnings outlook

Another quarter of solid profit gains is expected as earnings season ramps up. Fourth-quarter earnings for companies in the S&P 500 are expected to rise an average of 12.1% compared with the same quarter a year ago, according to analysts surveyed by Thomson Reuters I/B/E/S Estimates.

Market-moving news
Banks and taxes

The new tax law is having a negative short-term impact on some of the major banks that have begun reporting fourth-quarter results. Some are recording one-time charges to write down the value of deferred tax assets and account for the cost of repatriating profits held overseas. However, over the long run, the tax law’s rate cuts are expected to benefit banks’ bottom lines.

Market-moving news
Yields rise

Government bond yields extended their recent climb, as the yield of the 10-year U.S. Treasury bond reached 2.55% on Wednesday, the highest in 10 months. As recently as four months ago, the 10-year was yielding just 2.05%.

Market-moving news
Repeat rally

The stock market’s biggest daily gains of the week came on Thursday and Friday, as the Dow rose more than 200 points on both days. Shares of energy stocks were among the biggest gainers, a reversal from last year, when energy was the second-worst performing sector.

Oil climbs

Crude oil prices extended a rally that dates to the middle of last year and gained momentum as 2017 ended. Prices topped $64 on Friday, the highest level in about three years.

Bitcoin volatility

It was another volatile week for bitcoin as government officials in several countries offered opinions on how to regulate trading of the cryptocurrency. At one point in the week, bitcoin fell as much as 24% on some exchanges, but a price recovery to around $14,000 reversed much of that decline.

The week ahead: January 15–19

Monday

  • Martin Luther King Jr. Day, U.S. financial markets closed

Tuesday

  • No major reports scheduled

 

 

Wednesday

  • Industrial production and capacity utilization, U.S. Federal Reserve
  • Housing Market Index, National Association of Home Builders

Thursday

  • Housing starts, U.S. Census Bureau

Friday

  • 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 1/12/18
1 week
1.61.61.6 Large
1.41.51.7 Mid
2.32.11.9 Small
Value Core Growth
YTD
3.44.25.0 Large
2.63.54.7 Mid
3.53.73.9 Small
Value Core Growth
Index/market total returns as of 1/12/18 (%)
Close Week YTD
Dow Jones Industrial Average 25,803.2 2.0 4.4
NASDAQ Composite Index 7,261.1 1.7 5.2
S&P 500 Index 2,786.2 1.6 4.3
MSCI EAFE Index 2,126.1 1.2 3.7
International/developed (%)
1 week YTD
EAFE 1.2 3.7
Europe 1.3 3.6
France 1.6 4.7
Germany 0.4 3.8
Italy 3.9 8.5
Japan 1.6 4.8
Spain 1.8 5.8
Switzerland 0.2 1.9
U.K. 1.7 2.5
Emerging markets (%)
1 week YTD
EM 0.6 4.3
Brazil 1.0 7.2
China 1.6 7.3
India 0.8 2.1
Indonesia 0.0 1.3
Korea -0.5 2.1
Mexico -0.1 2.3
Russia 3.2 9.6
Taiwan -0.4 2.8
S&P 500 sectors (%)
1 week YTD
S&P 500 Index 1.6 4.3
Consumer discretionary 3.1 6.5
Consumer staples -0.5 -0.4
Energy 3.2 7.2
Financials 2.9 4.7
Healthcare 1.8 5.1
Industrials 3.2 6.1
Information tech 0.9 5.2
Materials 0.8 4.9
REITs -3.4 -5.3
Telecom -0.9 -2.2
Utilities -2.1 -4.5

Fixed income, currencies, and commodities

U.S. fixed-income style total returns (%) as of 1/12/18
1 week
0.0-0.2-0.7 Large
0.0-0.20.5 Mid Quality
0.1-0.10.4 Small
Value Core Growth
INTEREST RATE SENSITIVITY
YTD
0.0-0.4-1.8 Large
-0.1-0.4-0.3 Mid Quality
0.40.71.5 Small
Value Core Growth
INTEREST RATE SENSITIVITY
U.S. Treasury bond yields as of 1/12/18 (%)
END OF WEEK PRIOR WEEK
2 Yr 2.01 1.96
10 Yr 2.55 2.48
30 Yr 2.85 2.81
2-10 spread 0.54 0.51
10-30 spread 0.30 0.34
U.S. bond sector total returns (%)
1 week YTD
Aggregate -0.2 -0.5
Bank loans 0.1 0.4
Convertible 0.2 2.4
Corporate -0.2 -0.6
High yield -0.1 0.7
MBS -0.2 -0.4
Municipal -0.4 -0.5
Preferreds 0.2 -0.3
TIPS -0.4 -0.6
Treasury -0.3 -0.7
Global bond total returns (%)
1 week YTD
EM Local 0.6 2.1
EMD USD -0.4 0.2
Global Agg 0.3 0.2
Global Agg Ex-U.S. 0.6 0.7
Multiverse 0.3 0.3
Commodities (%)
1 week YTD
BBG Com Ind 1.0 0.7
Oil 4.6 6.3
Gold 1.0 2.0
Currencies (USD) (%)
1 week YTD
EM FX -0.2 1.0
AUD 0.4 0.9
CAD -0.9 0.2
CHF 0.4 0.3
EUR 0.9 1.2
GBP 0.9 1.2
JPY 1.7 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 12/31/17

as tracked by Strategic Insight
MONTH 12 Month ASSETS
U.S. equity -1.0 7.4 7,665.6
Sector equity 0.6 18.1 878.8
Allocation -2.6 -29.4 1,229.4
International equity 16.2 236.1 3244.2
Alternative -2.8 2.6 211.7
Commodities -0.2 3.1 91.8
Taxable bond 25.6 400.0 3,603.0
Municipal bond -0.2 33.4 697.2
Total all long-term funds 33.7 644.7 17,639.5

Leading Morningstar fund categories by monthly net flows ($B) as of 12/31/17

MONTH 12 Month ASSETS
Large blend 16.9 105.1 3,136.5
Intermediate-term bond 15.0 154.8 1,365.1
Foreign large blend 11.5 135.3 1,187.8
World bond 3.6 32.9 240.8
Ultrashort bond 2.9 39.4 135.5

Lagging Morningstar fund categories by monthly net flows ($B) as of 12/31/17

MONTH 12 Month ASSETS
Large growth -8.6 -62.8 1,569.4
Small blend -3.4 5.2 367.3
Large value -2.5 -28.3 1,211.1
High-yield bond -2.5 -17.7 304.5
Health -1.9 -8.1 158.9
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