Market Direction Week of March 14, 2016

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Last Week Review: Stocks were higher for the fourth week in a row, and the S&P 500 is now only marginally lower year-to-date. This four-week rally has been fueled by modestly better economic data and rising oil prices, which are up almost 50% from their February lows. The link between oil prices and the stock market has been particularly tight in 2016. In fact, oil prices and the S&P 500 have moved in the same direction every week this year. While low oil prices have hurt certain parts of the global economy, consumers are benefiting, and spending on discretionary items has remained solid. We think low oil prices will help improve economic growth in Europe and Japan, and they will help stabilize China's growth as well as give the U.S. a boost, since these countries are all oil importers and consumers. Consider adding broad-based international investments that should benefit when global growth improves, and make sure you have an appropriate mix of equity sectors that include energy-producing and energy-consuming companies.

Major indexes were higher on the week, with the all market sectors posting gains. The Dow Jones Industrial Average gained 207 points to end the week at 17,213, up 1.2%. The S&P 500 gained 22 points to end at 2,022, up 1.1%. The U.S. 10-year Treasury bond yield ticked up 0.11% to end at 1.98%.

How the market finished last week, the S&P 500 up 1.1%, the Nasdaq up 0.7%, and the Dow up 1.2%.

This Week: Next week will be much busier on the economic front, but central banks will remain in the spotlight with the Federal Reserve set to release its latest policy statement on Wednesday. Market expectations for the next fed funds rate hike have been brought forward over the past few weeks, but the fed funds futures market remains convinced that there is a zero percent chance of a hike at the March meeting. The market sees a 45.0% chance of a rate hike in June and a 51.0% probability of a rate increase in July.

Economic Calendar: PPI-FD (3/15), Retail Sales (3/15), Consumer Price Index (3/16), FOMC Meeting Announcement (3/16), FOMC Forecast (3/16)

Some of the major earnings announcements on deck: FDS, CTRP, WSM, ADBE.

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