February was another strong month for the U.S. stock market continuing its recent momentum as the S&P 500 increased nearly 4% for the month and is up approximately 6% for the year. The gains so far this year have been almost straight up as during the month of February, the Dow Jones came close to setting a new record of consecutive up days, but stopped at 12, just short of the record, which is 13 days. In addition, the Dow Jones hit 21,000 during the month taking only 24 trading days to move up from Dow 20,000 tying the shortest time period to move up to the next 1,000 level interval.
Internationally, stock prices also did well, with the MSCI EAFE Developed Market Index up 4.4% for the year, the MSCI Emerging Market Index up 8.7% and the MSCI EAFE Developed Small Cap Index up 5.9%.
Fueling the global stock market rally has been a combination of good corporate earnings reports and optimism that the various initiatives from the Trump administration will help stimulate economic growth. These initiatives include tax reform, de-regulation in health care, energy and financial services, massive infrastructure spending, new trade policies and repatriation of cash held overseas by U.S. corporations. While this is a long and complex list of programs that may not all be successful, at least for now, investors are optimistic that at least some of these initiatives will help spur stronger economic growth. On the corporate earnings front, the most recent earnings season was the strongest since the fourth quarter of 2014, ending six quarters of sluggish to negative earnings growth.
On the bond side, returns have trailed the stock market, but are still positive for the year. The 10-year government bond yield ended the month at 2.39% down slightly from the 2.45% from the end of January. For the year, the Barclay’s Aggregate Bond Index was up 0.9% and the S&P National Muni Index was up 1.1%, while the Barclay’s High Yield Index was up 2.9%.
David can be reached at 314-889-1096 or through email at David.Presson@fbol.com