US Equity Markets declined last week due to investor concerns about the spread of the coronavirus originating out of China and the impact it could have on global economic growth. The news provided a convenient reason for investors to take profits in what has been a very strong market. The S&P 500 fell 1.0% for the week to reduce its gains for the year to 2.0%. The Nasdaq dropped 0.8% for the week and is now up 3.8% for the year, while the Russell 2000 (small-cap stocks) continues to under-perform, down 2.2% for the week and down 0.4% for the year.
Global equity markets were also impacted by the coronavirus headlines, though improving economic data out of Europe offset some of those fears. Developed Markets were down 0.6% for the week, as European markets outperformed Asian markets. For the year, Developed Markets have increased 0.5% for the year. Emerging Markets, which includes China, dropped 2.4% for the week, reducing its gains for the year to 0.4%.
Interest rates dropped notably last week, as economic concerns tied to the coronavirus drove investors into the relative safety of US Treasuries. The yield on the US 10-Year Treasury fell to 1.68% from 1.83% the prior week, and for the first time this year, the Street is projecting a greater than 50% chance that the Federal Reserve cuts rates by another 0.25% in June.
Of Interest to Us
Amidst these new economic concerns, a number of fresh economic data points suggest that global growth is starting to pick up. Measures of EuroZone Manufacturing have improved for two consecutive months, European surveys suggest sentiment for the economic outlook has improved, Japanese tool orders appear to have bottomed, and South Korean exports of semiconductors have bounced. Collectively, these data indicate that global growth is at least bottoming, if not outright starting to improve.
Market Data
for the week ending 1/24/2020
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