Weekly Market Recap

Week ended January 24

Market-moving news

A step backward

The stock market’s positive momentum from the first two full weeks of 2020 was interrupted by geopolitical worries, and the major U.S. indexes fell around 1%. The Cboe Volatility Index, a gauge of investors’ short-term market volatility expectations, jumped 21% to a level that was roughly in line with its historical average.

Earnings scorecard

It’s the peak of earnings season, with nearly 150 companies in the S&P 500 Index and 14 of the Dow’s 30 components scheduled to report quarterly results in the week that starts January 27. Through January 23, 73% of companies reported earnings that exceeded analysts’ estimates—a beat rate that ranks above the five-year average, according to FactSet.

Virus outbreak

One of the key factors that weighed on global financial markets—especially Chinese stocks—was the recognition that a new flu-like virus could pose a global health threat. The coronavirus has been blamed for dozens of deaths in China, and the second U.S. case of coronavirus infection was confirmed on Friday.

Oil slide

U.S. crude oil prices tumbled 7.5% to around $54 per barrel, the lowest level in three months. Among the factors that depressed prices were travel restrictions resulting from the emergence of the coronavirus—a health threat that appears to have originated in China.

Yields drop

Prices of government bonds extended their year-to-date climb, sending yields sharply lower, as the yield of the 10-year U.S. Treasury bond slipped below 1.70% on Friday for the first time in more than three months. At the end of 2019, the yield was 1.92%.

Energy woes

The energy sector is expected to be a key laggard in earnings season as companies continue to report fourth-quarter results. Analysts expect profits in the sector will tumble by 43% relative to the previous year’s fourth quarter, according to FactSet. Excluding energy, profits across the other 10 sectors are forecast to rise 0.2%.

Brexit's arrival

The leaders of the European Union and the United Kingdom signed an agreement to move ahead with the long-delayed Brexit. The nation’s formal separation from the EU is scheduled for January 31, although Britain has agreed to abide by EU rules during a transition period until the end of this year.

Fed ahead

.The U.S. Federal Reserve is widely expected to keep interest rates unchanged when it concludes a two-day meeting on Wednesday. Fed statements will be closely watched for any indications as to whether the central bank will bolster market expectations that it could maintain its current neutral stance on rates throughout 2020, absent any big surprises in the economic outlook.

The week ahead: January 27-31

Monday

New home sales, U.S. Census Bureau

Tuesday

U.S. Federal Reserve Board opens two-day policy meeting
S&P/Case-Shiller 20-City Composite Home Price Index
Consumer Confidence Index, The Conference Board
Durable goods orders, U.S. Census Bureau

Wednesday

U.S. Federal Reserve Board concludes two-day policy meeting, Chairman Jerome Powell holds press conference
Pending home sales, National Association of Realtors

Thursday

Fourth-quarter GDP, advance estimate, U.S. Bureau of Economic Analysis

Friday

Personal income and consumer spending, U.S. Bureau of Economic Analysis
University of Michigan Index of Consumer Sentiment;

Unless otherwise noted, all data is from FactSet.

The data provided is for informational purposes only and is not an endorsement of any security, mutual fund, sector, or index. This does not illustrate the performance of any John Hancock fund. The information contained here is not guaranteed as to accuracy or completeness. All economic and performance information is historical and does not guarantee future results.

The Dow Jones Industrial Average is a price-weighted index comprising 30 widely traded blue chip U.S. common stocks. The NASDAQ Composite Index is a market-value-weighted index of all common stocks listed on the NASDAQ stock exchange. The S&P 500 Index tracks the performance of 500 of the largest publicly traded companies in the United States. The MSCI Europe, Australasia, and Far East (EAFE) Index tracks the performance of publicly traded large- and mid-cap stocks of companies in those regions. The Cboe Volatility Index (VIX) shows the market’s expectation of 30-day volatility and is constructed using the implied volatilities of a wide range of S&P 500 Index options. Weekly and year-to-date figures for the VIX show percentage changes, not investment returns. It is not possible to invest directly in an index. The Russell 2000 Index tracks the performance of approximately 2,000 publicly traded small-cap companies in the United States.

The Treasury yield curve is derived from available U.S. Treasury securities trading in the market and is provided directly by the U.S. Federal Reserve. The spread measures the difference in yield between two government securities. A normal (positive) yield curve occurs when longer-term rates are higher than shorter-term rates. The opposite holds true for an inverted yield curve. Year-to-date changes in U.S. Treasury bond yields are shown in basis points (BPS). One hundred basis points equals one percent.

Oil prices are represented by West Texas Intermediate (WTI) crude oil.

The G20 countries comprise a mix of the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85% of global gross domestic product, and over 75% of global trade.

Investment returns

Equities

U.S. equity size and style total returns (%) as of 1/24/20

1 week YTD

1 week
-1.2	-1.0	-0.7	Large
-1.4	-1.1	-0.6	Mid
-2.5	-2.2	-1.9	Small
Value	Core	Growth

YTD
0.2	2.2	4.1	Large
0.4	1.7	3.5	Mid
-2.2	-0.3	1.5	Small
Value	Core	Growth

Index/market total returns as of 1/24/20 (%)

Close Week YTD

	Close	Week	YTD
Dow Jones Industrial Average	28,989.7	-1.2	1.7
NASDAQ Composite Index	9,314.9	-0.8	3.8
S&P 500 Index	3,295.5	-1.0	2.1
MSCI EAFE Index	2,044.9	-0.6	0.4
Cboe Volatility Index	14.6	20.7	5.8

International/developed (%)

1 week YTD

	1 week	YTD
EAFE	-0.6	0.4
Europe	-0.9	0.1
France	-1.7	-0.6
Germany	-0.2	0.7
Italy	-1.3	0.1
Japan	0.4	0.2
Spain	-1.7	-1.5
Switzerland	0.0	2.2
U.K.	-0.9	-0.7

Emerging markets (%)

1 week YTD

	1 week	YTD
EM	-2.4	0.5
Brazil	-0.1	-1.8
China	-4.9	0.0
India	-0.7	2.2
Indonesia	0.2	3.9
Korea	-1.2	2.6
Mexico	-2.1	4.2
Russia	-2.7	3.0
Taiwan	0.0	1.0

S&P 500 sectors (%)

1 week YTD

	1 week	YTD
S&P 500 Index	-1.0	2.1
Communication services	-1.4	4.0
Consumer discretionary	-1.5	0.5
Consumer staples	-0.4	1.1
Energy	-4.2	-5.8
Financials	-2.2	-1.3
Healthcare	-2.0	0.5
Industrials	-1.0	2.5
Information tech	0.3	6.3
Materials	-2.3	-2.7
Real estate	1.0	3.3
Utilities	2.4	5.8

Fixed income, currencies, and commodities

U.S. fixed-income style total returns (%) as of 1/24/20

1 week YTD

1 week
0.1	0.5	3.2	High
0.2	0.4	1.8	Med	QUALITY
-0.2	-0.4	-0.2	Low
Ltd	Int	Long
INTEREST-RATE SENSITIVITY

YTD
0.2	0.8	4.6	High
0.3	0.7	3.3	Med	QUALITY
0.4	0.3	1.5	Low
Ltd	Int	Long
INTEREST-RATE SENSITIVITY

U.S. Treasury bond yields as of 1/24/20 (%)

END OF WEEK PRIOR YEAR END YTD CHANGE (BPS)

	END OF WEEK	PRIOR YEAR END	YTD CHANGE (BPS)
2 Yr	1.48	1.58	-10
10 Yr	1.68	1.92	-24
30 Yr	2.13	2.39	-26
2-10 spread	0.20	0.34	-14
10-30 spread	0.45	0.47	-2

U.S. bond sector total returns (%)

1 week YTD

	1 week	YTD
Aggregate	0.8	1.3
Bank loans	-0.1	0.4
Convertible	0.4	4.1
Corporate	0.9	1.6
High yield	-0.4	0.3
MBS	0.2	0.5
Municipal	0.4	1.4
Preferreds	-0.3	0.6
TIPS	0.7	1.2
Treasury	1.0	1.5

Global bond total returns (%)

1 week YTD

	1 week	YTD
EM Local	0.1	-0.1
EMD USD	0.0	0.9
Global Agg	0.6	0.4
Global Agg Ex-U.S.	0.5	-0.1
Multiverse	0.5	0.4

Commodities (%)

1 week YTD

	1 week	YTD
BBG Com Ind	-3.1	-4.3
Oil (WTI)	-7.5	-10.7
Gold	0.8	3.3

Currencies (USD) (%)

1 week YTD

	1 week	YTD
EM FX	-0.4	-0.7
AUD	-0.7	-2.9
CAD	-0.6	-1.3
CHF	-0.3	-0.3
EUR	-0.6	-1.8
GBP	0.3	-1.4
JPY	0.7	-0.7

U.S. economy

GDP

Jobs

Inflation

Ex-U.S.

Regions/countries

	GDP Growth (%) annualized	Inflation Rate (%) CPI	Unemployment Rate (%)	10-Year Government Bond (%)	Sovereign Credit Rating
Eurozone	1.2	1.3	7.5	_	_
China	6.0	4.5	3.6	3.07	A+
Germany	0.5	1.5	3.1	-0.37	AAA
Japan	1.7	0.8	2.2	-0.02	A+
U.K.	1.1	1.3	3.8	0.56	AA

GDP Growth (%) annualized
Eurozone	1.2
China	6.0
Germany	0.5
Japan	1.7
U.K.	1.1

Inflation Rate (%) CPI
Eurozone	1.3
China	4.5
Germany	1.5
Japan	0.8
U.K.	1.3

Unemployment Rate (%)
Eurozone	7.5
China	3.6
Germany	3.1
Japan	2.2
U.K.	3.8

10-Year Government Bond (%)
Eurozone	_
China	3.07
Germany	-0.37
Japan	-0.02
U.K.	0.56

Sovereign Credit Rating
Eurozone	_
China	A+
Germany	AAA
Japan	A+
U.K.	AA

Fund industry overview

Total net flows: open-end funds and ETFs ($B) as of 12/31/19

as tracked by ISS Market Intelligence SIMFUND

MONTH 12 Month ASSETS

	MONTH	12 Month	ASSETS
U.S. equity	-15.2	-70.4	9,141.8
Sector equity	-6.9	-36.5	944.7
Allocation	-3.1	-39.0	1,316.0
International equity	6.1	13.3	3,403.9
Alternative	-2.3	-13.1	182.6
Commodities	-0.9	8.8	108.0
Taxable bond	45.8	411.5	4,346.0
Municipal bond	10.2	104.6	860.0
Total all long-term funds	29.5	344.7	20,317.3

Leading Morningstar fund categories by monthly net flows ($B) as of 12/31/19

	MONTH	12 Month	ASSETS
Intermediate Core Bond	17.5	128.1	983.6
Foreign Large Blend	7.5	44.0	1,254.0
Intermediate Core-Plus Bond	6.8	63.3	704.6
Diversified Emerging Mkts	4.8	18.9	601.4
Muni National Interm	4.4	45.7	269.3

Lagging Morningstar fund categories by monthly net flows ($B) as of 12/31/19

	MONTH	12 Month	ASSETS
Large Growth	-11.6	-72.8	1,869.3
Large Value	-3.6	-22.0	1,252.9
Financial	-2.7	-10.5	57.0
Nontraditional Bond	-2.2	-8.5	153.6
World Large Stock	-2.1	-17.9	427.1

Unless otherwise noted, all data is from FactSet.

Oil prices are represented by West Texas Intermediate (WTI) crude oil.

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