February was a refreshing bounce-back for global markets, as most indices were able to make up for a disappointing January. In the U.S., the S&P 500 was up approximately 4.9% for the month and set new all-time highs.
When we review some of the nagging concerns facing the market from our January Recap, it’s clear that many of those questions were answered favorably in February. Specifically:
1. Emerging Market concerns moderately abated, in part because of more encouraging trade data out of China;
2. Janet Yellen seemed to gain investor confidence as she took over as FOMC Chair for Ben Bernanke and announced that the Fed would proceed as planned with its monetary policy;
3. The market seemed to accept Yellen’s explanation that cold winter weather was to blame for much of the disappointing economic data in the U.S.
Accordingly, investors who stayed the course during a difficult January were rewarded in February.
Looking forward to March, we’ll be watching a couple of things:
1. Increased tensions between Russia and Ukraine caused volatility in the markets in early March, and it will be worth watching to see whether this is the sort of geopolitical event that can cause even sharper volatility;
2. Gradual increases in the price of fuel could act as a strain on the economy. We have previously written about the potential economic boost that can be provided with lower gas prices; conversely, the higher gas prices go, the bigger strain the U.S. consumer could feel, and this would likely find its way into the real economy.
March came in like a lion, but so far, it’s looking a lot more like a lamb. We’ll continue to monitor the markets and offer our thoughts.
Carl Beck