Monthly Market Monitor - February 2015 Recap

Market Indices1FebruaryYear-to-Date
S&P 5005.75%2.57%
Russell 30005.79%2.85%
MSCI EAFE5.98%6.50%
MSCI Emerging Markets3.10%3.71%
Barclays US Aggregate Bond-0.94%1.14%
Barclays Municipal-1.03%0.72%
Barclays US Corporate High Yield2.41%3.09%

  • The S&P 500 rose 109 points to 2,105 in February, its best gain since October 2011.
  • Oil remains volatile, as still rising production cut an earlier 10% intra-month gain to 1.6%.
  • The NASDAQ Composite rose 328 points in February, the most in a month since 2000 and is within 1.7% of its 5,048 tech bubble peak.

U.S. stocks posted solid gains in February as a mix of global issues found several degrees of resolution, boosting investors' risk appetites. After a 3% January pullback, the S&P 500 rallied, setting four all-time highs in February while the Dow Industrials gained 6% to end at 18,133, its best month since January 2013. The technology-focused NASDAQ Composite surged 7.3% to a 15-year high of 4,964. With earnings season drawing to a close, the S&P 500's blended fourth quarter earnings growth stands at 3.7%, up from a year-end estimate of 1.7%. FactSet data also showed that by sector, healthcare and telecom stocks posted the strongest earnings growth, while energy-related stocks had the largest profit and revenue declines. Oil prices rode a roller-coaster, rising from a January low of $45.23/bbl. to as high as $54.29 before ending the month at $49.76. U.S. Fed Chair Janet Yellen told Congress that inflation and wage growth were still too low to raise rates at their next two policy meetings, while Greece won a four-month extension on its bailout loan. Stocks ended slightly lower on February 27th as data showed the economy expanded at a slower pace during the 4Q than previously estimated (2.2% vs.2.6%).

Nine of the ten major S&P 500 sectors posted gains in February, led by Consumer Discretionary (+8.6%), Technology (+8.2%) and Materials (+8%). Energy (+4.1%) rose the least, while Utilities (-6.4%) lagged. Materials (+6%) and Healthcare (+5.6%) are up the most so far this year.

Small-cap stocks, as measured by the Russell 2000 Index, gained 5.9% in February, slightly outperforming large-cap stocks. Mid-cap stocks slightly trailed large-caps, as the Russell Mid Cap Index advanced 5.5%. Growth notably outperformed value with the Russell 1000 Growth Index jumping 6.7%, while the Russell 1000 Value Index rose 4.8%.

The MSCI EAFE Index, a broad measure of 21 global developed markets outside of the U.S. and Canada, outperformed domestic stocks for the month and so far this year, advancing 6% and 6.5% respectively. The MSCI Emerging Markets Index, an index representing 23 emerging nations' economies, rose the most since last May, jumping 3.1% in February and extended its YTD gain to 3.7%.

The US dollar index extended its record-setting upward trend, rising for an eighth straight month. Treasuries, as measured by the Barclays U.S. Government Bond Index, fell 1.5% in February, paring January's 2.5% gain to a YTD return of 1%. As prices fell last month, the yield on 10-year U.S. Treasury notes rebounded by 35 basis points to end February just shy of 2%.

U.S. investment grade government, corporate and agency-backed bonds, as measured by the Barclays U.S. Aggregate Bond Index, declined 0.9% last month, trimming the benchmark's YTD gain to 1.1%. The Barclays U.S. Corporate High Yield Index, a proxy for below-investment grade corporate bonds, advanced 2.4%, extending a 3.1% YTD gain. The Barclays Municipal Bond Index ended a thirteen month rally, falling 1% in February and paring its YTD gain to 0.7%.

  1. Morningstar Direct (all performance percentages are total return based, which include reinvested dividend, interest)

This information is compiled by Cetera Investment Management.

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