February brought a lot of movement but very little action, as the S&P 500 index ended the difficult month at a level very close to where it originally started.
After opening 2016 with a 5.1% stock market loss in January, the volatility continued unabated throughout February. The month began with a steep two-week decline, doubling up on the January drop.
By mid-month the S&P 500 had fallen below 1840 – marking a decline of more than 10% for the year. But after hitting bottom on Feb. 15, the market made a recovery in the second half of the month that resembled a mirror image of the first half decline.By month’s end, the market had reclaimed nearly all the lost ground, with the S&P 500 finishing at 1932 – just seven points shy of the 1939 level where the month began.
The market for 10-year Treasuries continued to thrive in February as investors switched to bonds to flee the uncertainty of the stock market. But that trend could be short-lived since yields have become increasingly unattractive. By the end of February, the yield on Treasuries purchased on the secondary market had fallen to about 1.75% – the lowest yield range since 2013.