Monthly Report February 2018

Despite a favorable macroeconomic backdrop, global equity markets experienced a sharp pullback in early February and equity market volatility rose sharply. The market volatility seen in February demonstrates the sensitivity of investors to the prospects of a swifter pickup in inflation. Higher-than-expected US wage data first put bond markets under pressure – as investors priced in the potential for a more proactive Federal Reserve. US equities declined sharply in early February, and were weaker over the month. Confirmation that macroeconomic data remains broadly resilient did, however, allow markets to recover some poise by month-end. The final days of the month saw new Federal Reserve Chair Jay Powell address congress for the first time. Powell’s testimony was taken as marginally more bullish on the economy and as such more hawkish on the outlook for interest rates. The market moved to price a moderately faster pace of rate hikes in 2018.



The US government passed a package of fiscal stimulus that amounts to roughly 400 billion US dollars of public spending in the next two years. The return of the US fiscal and trade  deficit likely explains the ongoing weakness of the US dollar. The US dollar/euro exchange rate reached a peak of 1.25 over the course of February.

The Dow Jones Industrial Average declined 4.28%.

The 3.7% decline of the S&P 500 in February was the benchmark’s first negative month since October 2016. The 15-month streak matched the previous record set in 1958–1959. Until the recent market decline, the benchmark had established new records for length of time without 3% or 5% pullbacks. The S&P 500 began February down 8.6% over the first six trading days, briefly entering correction territory as the declines exceeded 10% off the benchmark’s January 29th peak. Even though the S&P 500 rallied 5.2% from February 9th until the end of the month and was within 6% of its all-time high, it was the worst month of performance since January 2016. Technology (+0.1%) was the only positive sector in February. Within the S&P 500, notable sector declines included energy (−10.8%), consumer staples (−7.8%), and real estate (−6.7%).



The Nasdaq Composite Index booked a 1.38% February fall.



The energy component recorded the steepest decline. Declines in crude oil (−4.8%) helped drive energy and natural resource equities sharply lower (−9.8%). Crude prices fell as Energy Information Agency data showed U.S. crude production rose above 10 million barrels a day for the first time since 1970 and domestic inventories increased.



Precious metals were weaker too, with gold down 1.5%. 



What began with a sell-off in bitcoin, one that pushed the total market capitalization of all cryptocurrencies to a 10-weel low of $276 billion, has ended in a seeming recovery, with the total value hitting $450 billion to end February trading. Comparing performance to January, the market saw a decline of 8.5% month-over-month, and a decline of 45.78% from its 2018 record high of $830 billion.



Bitcoin ended February pretty much on a sideways note, having eked out gains of 3% during the course of the month. Other cryptocurrencies among the top 10 most valuable coins, all registered price losses.

Ethereum had a poor February and lost 24% of the value. 



US Dollar Index


Ten-year Note


Indicators and Market Valuations

VIX Index


Shiller Price/Earnings Ratio (

Fear & Greed Index (CNN Money)


Index Trend Table (SwingTradeBot)