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Market Commentary - February 2019

During February, shifting sentiments regarding US-China trade negotiations were the main driver of US stock price movements. After a quiet first session of the month, Technology shares led a two-day US market rally. By the close on February 5, the S&P 500 Index was up 1.2% for the month overall. The US market gave up the majority of these gains on February 7 after President Trump indicated that a meeting with Chinese President Xi Jinping was unlikely before month end. On February 12, the US market roared back with a gain of more than 1% after President Trump said he was willing to extend the March 1 deadline for a decision to raise tariffs on Chinese goods if a trade deal was near completion. The US market gained an additional percent on February 15 when President Xi, noting important progress in negotiations, said trade talks would resume in Washington the week of February 19. On February 22, the S&P 500 gained 0.6% following US Treasury Secretary Mnuchin’s comment that the US & China had reached an agreement on currency. Stocks traded in a narrow range for the remainder of the month.

Select Equity benefited from a general recovery of the relative performance of stable return stocks.  Most quant portfolios fell behind during the first week of the month as uncertainty regarding US-China trade negotiations resurfaced. Their performance than matched that of their respective benchmarks for the remainder of the month. Small Cap was a notable exception, as it delivered strong relative performance during the second and third weeks of February.