Stocks ascend again.
February saw a continuation of January’s positive stock market returns. Read more to find out what happened and what it may mean for you.
Holding stocks paid off in January and this continued into February. Once more, US small-cap stocks led the charge, rising 4.4% (S&P 600 Index) with large-caps following suit, up 3.2% (S&P 500 Index). Advances in international stocks were not as pronounced with developed-market stocks increasing 2.6% and emerging-market stocks progressing 0.22% (MSCI EAFE and Emerging Market indices). Volatility was muted for the second month in a row. The S&P 500 moved by more than +/- 1% on only two days in February. Bonds finished the month essentially flat, edging down -0.06% (Bloomberg Barclays US Aggregate Index).
Why it happened.
Investors again kept their eyes on trade news, Federal Reserve policy, and signals about global economic growth. The largest single-day drop of the month (-0.92%) occurred on February 7th when the White House confirmed that a meeting between President Trump and China’s President Xi Jinping would not occur prior to a looming March 1st tariff deadline. This was shortly followed by the largest single-day jump of the month (1.3%) on February 12th when President Trump suggested he might delay planned tariff increases past the March 1st deadline. The increases were delayed.
The Federal Reserve continued to suggest that it was not in a rush to increase interest rates. The Fed Governor, Jerome Powell, said this was because of “conflicting signals” in the economy and potential slowing global economic growth ahead. While US jobs data remained solid, consumer confidence and manufacturing data were not as good. Reports on the continuing slowdown in China and yet more uncertainty about Brexit also fueled the Fed’s concerns. In this month’s sidebar, we look at why worries about Brexit and tariffs move the markets.
What this means for you.
Financial Engines builds a portfolio that is personal to you, considering your situation, goals and tolerance for risk. While February was a positive month, it’s important to understand how comfortably you can stomach the inevitable ups and downs of markets and set your portfolio’s risk accordingly. Your portfolio will probably have seen positive returns this month. The more aggressive the portfolio—because you’re further from retirement or have a higher risk tolerance—the better it will likely have done. As always, it’s important that we know as much as possible about your personal situation and risk preferences. Please let us know of any changes by logging into your Financial Engines account or calling one of our advisors.
©2019 Edelman Financial Engines, LLC. This publication is for informational purposes only and does not constitute investment advice or an offer to buy or sell any security. Future market movements may differ significantly from the expectations expressed herein, and past performance is no guarantee of future results. Edelman Financial Engines assumes no liability in connection with the use of the information and makes no warranties as to accuracy or completeness. Future results are not guaranteed by any party. Financial Engines® is a trademark of Edelman Financial Engines, LLC. Advisory services are provided by Financial Engines Advisors L.L.C. Call (800) 601-5957 for a copy of our Privacy Notice. Bloomberg Index Services Limited. BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). BARCLAYS® is a trademark and service mark of Barclays Bank Plc (collectively with its affiliates, “Barclays”), used under license. Bloomberg or Bloomberg’s licensors, including Barclays, own all proprietary rights in the Bloomberg Barclays Indices. Neither Bloomberg nor Barclays approves or endorses this material, or guarantees the accuracy or completeness of any information herein, or makes any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith. All other intellectual property belongs to their respective owners. Index data other than Bloomberg is derived from information provided by Standard and Poor’s and MSCI. The S&P 500 index and the S&P SmallCap 600 Index are proprietary to and are calculated, distributed and marketed by S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC), its affiliates and/or its licensors and has been licensed for use. S&P®, S&P 500® and S&P SmallCap 600®, among other famous marks, are registered trademarks of Standard & Poor’s Financial Services LLC, and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC. ©2019 S&P Dow Jones Indices LLC, its affiliates and/or its licensors. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used to create any financial instruments or products or any indices. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages.