- S&P 500 Index entered market correction territory in 6 days, quickest in history
- Home Prices rose 3.8% in December from the prior month
- February’s Consumer Confidence rose to 130.7, up from 130.4 from the prior month
Top Three Market Headlines
Volatile Week for Risk Assets: The last week of February proved to be a rough period for risk assets, as investors fear a coronavirus pandemic. The S&P 500 was off to a rocky start and fell 3.3% on Monday. The decline continued throughout the week, and by Thursday, it was down 10% from its all-time high only 6 days prior, officially entering correction territory. This was the swiftest market correction in history. Wall Street’s “fear index,” measured by the CBOE Volatility Index (VIX), spiked 42% on Thursday to 39.2, its highest level since the late December 2018 high of 36.1. Consequently, as investors continue to seek safe haven assets, the yield on the 10-year U.S. Treasury fell to a record low of 1.14% by the end of the week.
Home Price Gains Continue to Rise: Data released last week indicated that the U.S. housing market continued its upward trend in December. According to the S&P CoreLogic Case-Shiller National Home Price Index Average, national home prices rose 3.8% for the calendar year 2019, up from a 3.5% pace in November. Phoenix, Tampa, and Charlotte exhibited the strongest growth in December, posting increases of more than 5% annually. Meanwhile, the largest metropolitan areas slowed their pace, as the 10-City Composite reported a mere 2.4% year-over-year increase for the same period. The continued rise in home prices is attributed to the lack of housing supply paired with high demand and favorable economic conditions given the ultra-low mortgage rate environment.
U.S. Consumers Remain Optimistic: Despite the recent increase in market volatility stoked by uncertainty surrounding the coronavirus, consumers continued to feel optimistic about economic conditions through the month of February. The Consumer Confidence Index, released by the Conference Board last Tuesday, registered 130.7, up from 130.4 in January. Though consumers’ assessment of current conditions decreased during the month, their short-term outlook of business conditions over the next six months improved. The survey suggests that consumers continue to have a favorable view of the economy, supported by solid employment growth.