Market Perspective for February 22, 2019

Equities rallied for their ninth-straight week. The Russell 2000 Index climbed 1.24 percent to lead the major indexes. Among the larger S&P 500 sectors, SPDR Technology (XLK) increased 1.45 percent. SPDR Materials (XLB) and SPDR Utilities (XLU) saw gains of 2.35 and 2.41 percent.

Weekly jobless claims declined to 216,000. Durable goods orders for December increased 1.2 percent. Existing home sales hit an annualized pace of 4.94 million in January, down from 5.00 million in December. Homebuilder confidence index rose from 58 to 62. Housing could benefit from falling interest rates with the 30-year mortgage falling to an average of 4.35 percent last week.

China reported credit growth equivalent to 5 percent of GDP in January. iShares China Large Cap (FXI), made up of Chinese shares listed in Hong Kong, climbed 3.52 percent on the week. Deutsche X-trackers CSI 300 China A-Shares (ASHR) advanced 5.67 percent.

International funds outperformed this week thanks in part to a weaker U.S. dollar. iShares MSCI Emerging Markets (EEM) advanced 2.28 percent and iShares MSCI EAFE (EFA) 0.79 percent. The U.S. Dollar Index declined 0.30 percent.

Berkshire Hathaway (BRK.A) declined due to its exposure to Kraft Heinz (KHC). An analyst at Barclays cut his earnings forecast in half in the wake of the company’s miss and dividend cut. Berkshire owns 27 percent of Kraft.

Wal-Mart (WMT), DISH Network (DISH), and Medtronic (MDT) were among firms beating earnings estimates this week. CVS Health (CVS) disappointed investors.


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