U.S. Stocks Finish Week Higher in Lackluster Trade

The major U.S. stock indexes finished higher last week with the NASDAQ Composite posting the largest gain. The ranges were relatively tight, as prices consolidated somewhat after posting weeks of gains. According to FactSet, the end of February marked the best two-month start to the year for the S&P 500 since 1987, with the index up 11.5%.

In the cash market, the benchmark S&P 500 Index settled at 2803.69, up 0.04%. It’s up 11.8% for the year. The blue chip Dow Jones Industrial Average finished at 26026.32, up 0.0%. For the year, it’s up 11.6% and the technology-based NASDAQ Composite closed at 7595.35, up 0.9%. For 2019, it’s up 14.5%.

Geopolitical Events Had Little Effect on Markets

Geopolitical events were watched last week, but had little effect on prices. Early in the week, President Trump announced he would delay the March 1 trade deadline for additional tariffs on Chinese goods as trade negotiations are progressing. Investors didn’t react much to the news as a delay was already assumed and priced in. Investors are waiting for more specific details from the trade agreement. Trump’s former lawyer Michael Cohen gave scathing testimony about the President and the U.S.-North Korean summit in Vietnam generated a lot of headlines, but ended abruptly and without a deal in place, but without any major market implications.

Economic Reports Were Market Moving Events

On the economic front, U.S. Fourth-Quarter Gross Domestic Product (GDP) came in stronger than expected at 2.6%, and 2.9% for full-year 2018. Traders were looking for a 2.2% increase during the fourth quarter.

The details of the report showed growth was helped by a 2.8 percent rise in consumer spending along with increased nonresidential fixed investment, exports, private inventory investment, and federal spending.

According to the Commerce Department, weakness in residential fixed investment, which fell 3.5 percent, and state and local government spending served as a drag. The gross private domestic gain slowed to 4.6 percent in the quarter after a robust 15.2 percent rise in the previous period.

In other news, the Institute for Supply Management released data showing U.S. Manufacturing activity expanded at its slowest pace since November 2016. ISM Manufacturing PMI was 54.2, missing the 55.6 forecast and coming in below the 56.6 previous reading. The University of Michigan consumer sentiment index came in below expectations for February at 93.8 versus a 95.8 forecast. The Core PCE Price Index was flat at 0.2%, but Personal Spending and Personal Income fell.

Powell Testimony Almost a Non-Event

Last week, Fed Chairman Jerome Powell gave his semiannual Congressional testimony, while offering nothing of substance for investors. He reiterated the same message from the Fed minutes. He acknowledged solid economic fundamentals while pointing out persistent market risks, including tight financial conditions tied to the late-2018 sell-off and the global economic slowdown.