It was a very interesting and volatile week for the U.S. equities. S&P 500 finished just shy of its historical high, gaining 2.7% for the week. Nasdaq and Russell 2000, as a proxy for high-tech and small cap stocks were even more optimistic, ending the week at a 14-year and an all-time high. The reason for investors’ optimism lies behind the reverse in dollar and most importantly, the conclusion of the Federal Open Market Committee meeting on Wednesday with the official policy statement now omitting the word “patient.” Long story short, Fed revised its previous guidance for GDP growth from 2.6-3% to 2.3-2.7%, forecasts unemployment rate at 5-5.2% vs. 5.2.-5.3%, and sees inflation at 0.6-0.8% vs. 1-1.6% three months ago. Janet Yellen, during her press conference said that rate hike decision would be based solely on economic data as early as June. No doubt investors loved it and sent the “fear gauge” 18.6% down, to a 13.02 mark.
Across the international arena, there were no surprises at all. With the help of gaining commodities prices and growth in the US markets, all regions gain more than 4%, except Pacific Asia (3.3%.) Last but not least, Pacific Asia completely recovered from the 2015 drawdown and set a new high for the year.
A weaker dollar and Janet Yellen comments on a rate hike were exactly what commodities needed. Gold advanced by 2.4% for the week and almost completely erased all losses for the year. Unfortunately for the oil, growing stockpiles did not allow oil investors to fully ride the tide of optimism, extending its losses for the year by an additional 2.2%.