It was a brutal week for the markets last week as the indices experienced the largest pullback in recent memory. The more concentrated Dow led the way down with a loss of 4.1% followed closely by the S&P 500 with a loss of 3.85%.
After a string of consecutive weekly gains, last’s week substantial drop marked the largest pullback since early January 2016.
However, there was little economic news to warrant the pullback that began on Monday. Tuesday marked the first State of the Union address by President Trump. In his speech, President Trump called for a $1.5 trillion infrastructure plan. This focus did little to spur on the materials sector as it was one of the areas hardest hit last week.
Wednesday was the only day with gains as the market returned to a more subdued trading range. This continued into Thursday as it seemed like the worst was behind us. Sadly, Friday opened lower and the selling escalated going into the close.
After two weeks of bitter debate between Republicans and Democrats along the White House and the FBI, the infamous FISA memo was made public midday Friday. The FBI repeatedly claimed that the memo was classified. However, after its release, the debate reached new levels. Citizens began to ask what exactly the FBI’s involvement in acts of omission behind the scenes was leading up to the FISA application during the presidential election and their cause to attempt to suppress this knowledge when It came to light. This discussion is only going to continue as we go into the new week.
Looking back, it seemed like everything that could fall last week, did.
Bonds fell across durations and classifications last week. The Bank of America US Corporate 10 Year+ index was one of the largest losers on the week as it shed 1.96% for the multiday session.
Mortgages, Corporates, and High Yield all fell while the Treasury Yield Curve rose higher. The 10-year Treasury rose as high as 2.852% intraday Friday before closing out the week at 2.84%.
Overall, the economic news that was released was positive. The employment situation beat expectations as 200,000 new jobs were added for the month and the Average hourly earnings rose .3% higher month over month as the new Tax Reform began to take hold.