Market Direction Week of February 15, 2016

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Last Week Review: Global stock markets remained under pressure this week on a continuation of the global growth concerns that have weighed on markets for much of 2016. It's been a rocky start to the year for stocks, with the domestic market down more than 10% from its all-time high set in May last year. To help navigate the volatility, remember that volatility is normal, and overreacting often leads to poorly timed investment decisions. Additionally, market pullbacks can be good opportunities to add quality investments at lower prices. We don't expect market volatility to subside anytime soon, and stocks could remain under pressure until the headlines and investors' attention is more evenly divided between the good news and the bad news. Fortunately, the underlying fundamentals of economic and earnings growth are still in a position to offer support to markets looking ahead.

Major indexes were lower on the week, with the utilities sector leading declining sectors and the consumer staples sector being the only advancing sector. The Dow Jones Industrial Average lost 231 points to end the week at 15,974, down 1.4%. The S&P 500 lost 15 points to end at 1,865. Bond prices were higher on the week, pushing the U.S. 10-year Treasury bond yield lower by 0.09% to end at 1.74%.

How the market finished last week, the S&P 500 down 0.8%, the Nasdaq down 0.6%, and the Dow down 1.4%.

This Week: U.S. markets are closed on Monday for President’s Day but Japan’s Q4 GDP number that comes out at the beginning of the week will probably influence Tuesday’s U.S. open. The other two reports I’ll be watching next week is China’s Leading Economic Index and the Housing data next Wednesday. The media will probably highlight next week’s January FOMC Minutes but I really don’t believe there’s a lot that could come out of that and surprise markets at this juncture.

Economic Calendar: PPI-FD (2/17), Industrial Production (2/17), FOMC Minutes (2/17), Philadelphia Fed Business Outlook Survey (2/18), Consumer Price Index (2/19)

Some of the major earnings announcements on deck: FANG, FOSL, ATHM, MRO.

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