Weekly Commentary, 3/28/16 – 4/1/16
Stocks started April the way March ended by heading higher. The S&P 500 Index rose 1.7% to 2,072, while the NASDAQ gained 2.60% to 4,914. Small caps outperformed on the week with the Russell 2000 Index rallying 3.5%. The S&P 500 has risen 1.4% in 2016 and is 2.7% away from a record. The Dow Jones is now up 2.1% so far this year and just 2.8% away from its all-time high. Small cap stocks are another story down approximately 1.60% year to date and are behind 13% from the highs established in 2015.
The market got a boost from dovish comments on interest rates from Federal Reserve Chair Janet Yellen and stronger U.S. economic data. Yellen made it clearer than ever in a speech on Tuesday that concerns about slowing global growth and potential market mayhem will keep the Federal Reserve extra cautious about hiking rates this year.
The jobs report on Friday proved that the U.S. can add more jobs without the unemployment rate falling to levels that would spur wage inflation. In fact, the jobless rate bumped up to 5% as more people entered the workforce. The yield on the benchmark 10-year Treasury note has fallen for the past three weeks and closed Friday at 1.79%, after starting the year at 2.23%
One good sign last week was that shares rose even though oil prices fell, the first time that has happened in many weeks. Crude prices fell 7% on the week to 36.63 per barrel.
From a price action perspective, the S&P 500 Index and the Dow Jones Index are now both above previous resistance levels of 2050 and 17,700, respectively. Market breadth is expanding as we witness relative improvement in some of the more risky asset classes like small cap stocks and the NASDAQ.
The market fundamentals are improving and the trends in market breadth continue to underpin the broader market. The upcoming earnings season could provide sufficient evidence to validate that the price action from the February lows is more than a relief rally.
We will continue to monitor the markets using our proprietary tools to adjust the asset allocation in our various strategies.
The Stadion Managed Account Risk objectives are managed using a “core/satellite (Flex)” approach. The core positions will comprise 40-60% of the portfolio and are invested in equity, fixed income and money market instruments with the strategic allocation becoming more risk averse as the risk tolerance of each fund changes. In allocating the objective’s Flex assets (the remaining 40-60% of each portfolio) Stadion uses a proprietary, rules-based weight-of-the-evidence model. The portfolios currently maintain benchmark allocations per risk objective.
Past performance is no guarantee of future results. Investments are subject to risk, and any of Stadion’s investment strategies may lose money. The investment strategies presented are not appropriate for every investor and financial advisors should review the terms and conditions and risks involved. Stadion’s actively managed portfolios may underperform during bull markets. Some information contained herein was prepared by or obtained from sources that Stadion believes to be reliable. There is no assurance that any of the target prices or other forward-looking statements mentioned will be attained. Any market prices are only indications of market values and are subject to change. The S&P 500 Index is the Standard & Poor’s Composite Index of 500 stocks and is a widely recognized, unmanaged index of common stock price. The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The Russell 2000 Index is a small-cap stock market index of the bottom 2,000 stocks in the Russell 3000 Index. It is the most widely quoted measure of the overall performance of the small-cap to mid-cap company shares. The NASDAQ Composite is a stock market index of the common stocks and similar securities listed on the NASDAQ stock market and it is highly followed in the U.S. as an indicator of the performance of stocks of technology companies and growth companies. It is not possible to invest directly in indexes (like the S&P 500) which are unmanaged and do not incur fees and charges. The Sharpe ratio measures the excess return per unit of deviation, or risk. Any references to specific securities or market indexes are for informational purposes only. They are not intended as specific investment advice and should not be relied on for making investment decisions.
Past Performance is no guarantee of future results. Investments are subject to risk, and any of Stadion's investment strategies may lose money.