Stocks closed February with big gains thanks to early-month rallies due to a rebound in oil prices. Markets were then able to hold on to these gains given low volatility over the final two weeks of the month.
For the full month, the S&P 500 added 5.5%, ending 15 points from its record, and its best month since October 2011. The Dow Jones Industrial Average climbed 5.6%, 112 points from its high.
Stocks closed out the final trading day of February with modest losses.
After Federal Reserve Chair Janet Yellen addressed Congress earlier in the week, Dudley reiterated the central bank’s commitment to patience while speaking at a monetary policy forum in New York on Friday.
“I believe that the risks of lifting the federal funds rate off of the zero lower bound a bit early are higher than the risks of lifting off a bit late,” he said. “This argues for a more inertial approach to policy.
According to a survey by the Confederation of British Industry retail sales fell in February on a year-on-year basis. The survey of 138 firms, showed that both volume of retail sales and orders failed to meet growth expectations in the month. The survey shows that growth was significantly below expectations for a balance of +42%. However, retailers expect sales volumes to grow next month, with 44% expecting them to rise and 17% to fall. After a strong start to the year, retailers were disappointed by the unexpected halt in sales growth. Looking ahead, the outlook for the retail sector is fairly positive, with the boost to household incomes from falling inflation likely to support spending.
As the banks gear up to announce annual results it was revealed that the UK government has sold more shares in Lloyds Banking Group. The latest sale saw Treasury owned subsidiary UK Financial Investments, which manages the government’s bank investments, sell around 678 million shares, raising over 500 million pounds. This takes the government’s stake below 24%, from a peak of 41% after it ploughed in cash to keep Lloyds afloat during the 2008 financial crisis. Chancellor George Osborne said, “This is further progress in returning Lloyds Banking Group to private ownership, reducing our national debt and getting taxpayers’ money back.”
More trouble for the banks as it emerged that RBS has suspended a further two employees as part of its investigation into the rigging of foreign exchange markets. Last month RBS was one of six banks fined a combined 2.6 billion pounds for failing to stop traders rigging the forex markets, it launching an internal review of more than 50 current and former traders. RBS, 80% owned by the government. Shares in RBS tumbled by 16.7p to 386.6p as it released its results, which were overshadowed by revelations that its Coutts & Co Swiss bank subsidiary was under investigation for client tax evasion. RBS reported a loss of 3.5 billion pounds for 2014, down from a 9 billion pound loss the previous year. However, after one-off costs are stripped out, operating profits were 3.5 billion last year, the highest since 2010. CEO Ross McEwan confirmed he would not receive a bonus this year but RBS will still pay out bonuses from a pool of 421 million pounds, which is 21% lower than in 2013.