Kai W. Hong, CFA
Managing Director & Chief Investment Strategist
Despite a modest recovery at the end of January, markets began the month of February with renewed discomfort. Economic data out of China continued to be weak, and oil prices fell back below $30/barrel. Earnings at financial firms were challenged, and questions arose regarding the valuations of a number of public and private technology companies. Against the uncertain backdrop, many central banks, including the US Fed, maintained a more accommodating stance, and the trajectory of future rate increases began to look more shallow despite an improving employment picture. A rebound in the price of oil mid-month appeared to ease some investor fears, and markets rallied modestly into the end of the month.
While there was quite a bit of intra-month volatility, the broad markets ended February largely flat. The Russell 3000 Index finished the month at -0.0% as Materials and Producer Durables led and Energy, Technology, and Financials lagged. US small cap stocks were also flat as the Russell 2000 Index returned +0.0%. Outside of the US, performance was similarly muted. The developed market MSCI World ex USA Index returned -1.4%, and the developing market MSCI Emerging Markets Index returned -0.2%.