March 5th, 2014 9:21 AM by Mel Samick
Despite the social unrest and political uncertainty in the Ukraine and Venezuela, and slower domestic economic growth suggested by recent weakness in housing, mortgage lending, and employment, stocks held strong and ended the month on a solid note. However, Federal Reserve Chair, Janet Yellen, attributed some of the recent weak data to unusually cold weather and reiterated that it would take a "significant change" in the economic outlook for the Fed to adjust its tapering plans.
Last week all major indices ended in positive territory. The S&P closed at 1,859 while the Dow ended the trading week at 16,321. In major economic indicators released last week, economic slowness was evident with real GDP growth for the fourth quarter being revised down sharply to an annualized 2.4 percent from the advance estimate of 3.2 percent, as compared to the third quarter's 4.1 percent. Also reflecting the recent economic slump, the Chicago Federal Reserve's National Activity Index for January slumped to its lowest reading since last July at minus 0.39. In spite of the dreadful weather, there are signs of improvement in manufacturing. New factory orders for durables were down 1.0 percent for January, which was better than expected, following a drop of 5.3 percent in December.
Turning to the bond market, despite new issuances, strong demand for Treasuries pushed longer-term yields lower last week. At the end of the week, the Ten-year Treasury yield was down nearly 7 bps and ended at 2.66 percent. Towing the same line, conforming mortgages rates also loosened a bit. At the end of the week, the Conforming Fixed 30-year rate leveled out at around 4.16 percent, while the Conforming Fixed 15-year rate finished around 3.18 percent. However, New Home Sales for the month of January surprised investors with a 9.6 percent increase in January to 468,000, the strongest annual rate since July 2008.
With political unrest escalating in the Ukraine and a slumping Russian stock market, investors will expect a negative impact on European Union stocks this week.
Information Provided by NYCB Capital Markets