After a touchy January, stocks showed a good deal of momentum in February, although U.S. investors seemed wary of unrest in Venezuela and Eastern Europe as we transitioned into March. Tensions between Ukraine and Russia garnered headlines and injected some uncertainty into the U.S. and global stock markets as February faded into March, particularly affecting companies with significant exposure to Russia. Investors also have their eyes on the European Central Bank, which will announce this week if additional monetary easing policies will be put in place. They’re waiting, too, for China to share its outlook for 2014’s economic growth, which is also expected to come this week.
Despite the global uncertainty, all three major indices ended the month higher than they started The Dow Jones Industrial Average gained almost 4%, while the S&P 500 returned 4.3%. The NASDAQ climbed higher still, returning almost 5% in the second month of the year.
Meanwhile economic reports were a mixed bag (business investments and consumer spending rose; but GDP growth was revised down and job growth was middling). Federal Reserve Chair Janet Yellen cautions that “part of that softness may reflect adverse weather conditions. But at this point it’s difficult to discern exactly how much.” Job growth, for example, slowed in December and January, but hiring usually picks up in spring.
For now, the central bank is taking a wait-and-see approach before deciding to curtail its tapering efforts. Raymond James Chief Economist Scott Brown acknowledges that the economy has had a long road to recovery, but he believes that we’ll have a clearer picture within the next month or two. “The March to June period will be critical to this year’s outlook,” he noted.
As always, I’ll be watching the markets for any long-term trends that could affect your financial plan and will share relevant news with you. In the meantime, please feel free to reach out to me with any questions. I look forward to hearing from you.
Ian Kiefer, CFP®
Investing involves risk, and investors may incur a profit or a loss. Past performance is not an indication of future results. Investors cannot invest directly in an index. The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The performance mentioned does not include transaction costs which would reduce an investor’s return.