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Microanalysis of the recent Market, economic conditions, and the outlook - Essay Example

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Microanalysis of the recent Market, economic conditions, and the outlook

The good returns in March were attributed to positive economic data on employment and retail sales. In S&P 500, stocks listed in all sectors ended the month in a positive territory led by healthcare, utilities and consumer staples sectors which were among the best performing. The investors mainly bought into stocks offering relatively high dividend yields, strong brands, and some other business models that had lagged behind. Broadly, consumer discretionary and financial stocks outperformed the market expectation. The rest were less robust led by stocks from the energy sector which was the least performing. The stocks did well across all market capitalizations, with value and growth shares fairly matched during the month. In the month of April, the stock market underwent what analysts would call market correction after touching record highs in both the S&P 200 and DJIA. The DJIA touched levels just below 14900 while S$P 500 rallied to above 1,600 points. Analysts say the market has to correct itself after a rally which began late 2011, through 2012, to March this year. The indices dropped at the close of the month as compared to the March data. Going forward, the markets are picking in May, but the yearly cycle sell off is expected in the next few days which might depress the market (T. Rowe Price Investment Services, 2013). Bonds market produced flat results in the month of March with the long-term government bonds being the poorest performers in the category of domestic fixed income sectors as the yields realized were modest. The investment corporate bonds which had the lowest nominal yield rates, trailed the entire market and significantly lagged behind compared to high yield counterparts. The high-yield bonds benefitted from robust equity market and relatively low levels of new issuance in the month. The mortgage-backed securities performed better the overall investment- grade market which was propped by higher yields which lured investors back into the sector alongside Federal Reserve. Foreign bonds on the other hand, lagged and posted modest losses. This was due to the major currencies devaluing against the US dollar which weighed on foreign markets’ bonds besides political turmoil and rise in the risk aversion by traders on the emerging market’s investment vehicles (Shreve, 2013). Treasury yields, on the other hand, moved higher in the month, but retraced a portion of the previous gains. In the first half of the month, long-term yields steadily with a ten-year year notes reaching 2.06% which was an almost one-year high on the 8th of March. The rise was manly driven by the promising labor market report which raised the prospect of future market inflation and the less accommodative Federal Reserve policy. The Labor Department had earlier, in February, announced that the unemployment rate had fallen to a four-low of 7.7%, with the number f jobs created standing at about 236,000. The services sector also showed surprising strength which was reflected in the healthy growth in retail sales. The Federal Open Market Committee (FOMC) has a two-day meeting in the month of March. They decided to maintain the monetary policy, but it altered the assessment of the overall economic outlook of the country. This time they were more upbeat saying that the labor market conditions had shown signs of improvement in recent months. The fed, led by Ben Bernanke ...Show more


Microanalysis of the recent market, economic conditions, and the outlook Name: Number: Course: Lecturer: Date: Microanalysis of the recent market, economic conditions, and the outlook Stock markets in the United States of America have been doing well since the beginning of the year…
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