The Nasdaq remains the strongest index this year. In contrast, small-caps are the weakest segment. The Russell 2000 Index has been underperforming since early December.
While one-month Libor held steady this past week, three-month Libor climbed to 1.16 percent. The 2-year, 5-year and 10-year Treasury yields all fell. The 10-year yield remains in a trading range between 2.3 and 2.6 percent.
A dip in high-yield continued to spill into short-duration and floating-rate funds, although the declines in floating-rate funds are very mild. Thompson Bond (THOPX) resumed its uptrend as short-term interest rates declined.
A bottom in the dollar is not likely until Congress takes up tax reform in April. The very near-term support is at 99.5 on the U.S. Dollar Index. A break below could push the dollar down about 2 percent to 97.
The euro also could signal further dollar weakness in the coming weeks as FXE approaches its 2017 high. After bottoming in late December, the euro has been in a short-term bullish pattern.
Emerging markets pulled back with U.S. markets. Russia and Brazil have dragged on emerging market funds. China has been steady, moving in line with EEM. India remains the strongest market among the BRICs.
Oil inventory increased by 5 million barrels last week, well above the 2.8-million barrel estimated. Shale oil producers keep cutting costs and raising production despite the small dip in prices. Energy equities slipped to a new 2017 low in the wake of the inventory news. Although natural gas prices have rebounded, they followed the energy sector lower.
Consumer staples and utilities were the best performing sectors this week, as falling interest rates led traders back into rate-sensitive sectors.
Dividend funds continue to perform well versus the broader market. Growth-oriented funds, such as VIG, have held up better than high-yield funds, such as HDV, going back to February. The most growth-oriented funds, such as WisdomTree U.S. Quality Dividend Growth (DGRW) have performed the best this year.
SOXX is up 12 percent more than SPDR Technology (XLK) over the past 6 months. The semiconductor sector has benefited from the development of automated cars. Intel (INTC) recently purchased Mobileye (MBLY), jumping into the automated driving industry.