There was no consensus among investors during this week. S&P 500 finished the week with a 0.86% loss and moved back into the negative territory on a YTD basis. Small-cap stocks, as measured by Russell 2000, finished the week with a 1.2% increase. One of the reasons behind the decrease in S&P 500 is the start of the ECB quantitative easing program, which had a significant impact on Euro and further strengthening of the greenback (+2.5% for the week.) Strong dollar continues to be one of the dominant forces that investor watch very closely and that potentially may negatively affect corporate revenues and earnings in the short- and mid-term.
Volatility index (as measured by VIX index) closed at 16, a modest increase of 5.3%, despite the market selloff. While still well below 20, investors continue remain slightly cautious and expect that this week selloff should not be too deep and painful.
Energy sector, without a doubt, was the biggest laggard of the week. Dragged by falling oil prices, the sector lost 2.8%, slightly more than Technology sector (-2.1%.) Technology sector was, in turn, significantly affected by Intel’s Q1 revenue guidance cut on weaker-than-expected demand for desktop PCs as well as by the 2.4% decline in Apple due to chill welcome of its new iWatch. The other notable sector event is the end of another Fed “stress test” round. Most banks successfully passed the test, but it were mostly Morgan Stanley, Goldman Sachs, and Wells Fargo who contributed the most towards ending the week on a positive note.