ND&S Weekly Commentary - Fed Raises Rates

Both equity and fixed income markets advanced last week. International equity markets were the best performers with the EAFE index up 2.1% and emerging markets advancing 4.3%. In the U.S., the S&P 500, the DJIA and the NASDAQ were up 0.29%, .01% and 0.7%, respectively. Growth stocks continued to slightly outperform value for the week. Year-to-date large cap growth stocks are up 9.1% vs. value up only 4.3%. Fixed income markets also finished the week higher as the yield on the 10 year U.S. Treasury Note dropped from 2.58% to 2.50%.

As expected, the FOMC raised its target for short term interest rates by .25% last week. Indications from the Fed, however, were less enthusiastic regarding the economy than the financial markets have been. The Fed continues to expect “gradual” rate hike movement through the end of the year with two more rate hikes expected. Their median forecast for economic growth this year is 2.1% - unchanged from December. As a result, interest sensitive stocks were the best performers in the S&P 500 last week with real estate stocks up 1.9% and utilities and telecom up 1.3%.

This is a light week for economic news with reports on housing and durable goods expected. Welcome to Spring!

“Spring is nature’s way of saying: Let’s Party!” - Robin Williams