US Stock Markets Ended March 8, 2019

Equity markets were lower last week as fears of weaker global GDP weighed on returns. The European Central Bank sent ripples through markets after they slashed their 2019 real GDP growth target from 1.7% last December to 1.1%. Additionally, they made smaller cuts to their 2020 and 2021 estimates. The U.S. Change in Nonfarm Payrolls where 25k compared to an expected 180k last month, uncharacteristically low. There have only been 2 months since 2011 where the number has come in lower. Despite the disappointing jobs number, wage growth remains strong at 3.4% year-over-year and the unemployment rate of 3.8% remains historically low. The tough economic backdrop didn't slow the announcement of Biogen Inc. to acquire Nightstar Therapeutics for a 74% premium and nearly $750m all cash, in a deal that is expected to close by the end of the quarter. Last week, retail had a string of weak earnings announcements. Kroger Co. announced disappointing 4Q earnings as margin compression continues, primarily from pricing and product mix changes, as well as additional investments into their supply chain. Despite their efforts to soften the blow last quarter, Ross Stores announced lower 2019 guidance, despite earnings and revenue that were in-line with expectations. Burlington Stores fell over 11% after reporting that revenue missed and margins were lower last quarter. Putting the current equity market in perspective, March 9, 2009 marked the low of the 'Great Recession'. One would have gained 400% had they invested in the S&P 500 10 years ago, which computes to a 17.4% average annual return. Had one invested at the previous high, October 9, 2007, they would have had a 124% return, or a 7.3% average annual return. Lesson? Invest high or invest low, equities remain a tremendous vehicle for buy-and-hold capital appreciation.
Posted on Monday, March 11, 2019 @ 8:49 AM

These posts were prepared by First Trust Advisors L. P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.