In spite of a strong rebound in the second half of February, the U.S. benchmarks mostly ended the month in the red due to China-led global growth worries, mixed domestic economic data and rate hike uncertainty. Though the Dow ended the month in the green, the S&P 500 and the Nasdaq witnessed the third-straight month of loss for the first time since Sep 2011. However, strong gains in the beaten down sectors and a considerable rise in oil price helped the benchmarks to pare down some of the losses.

Meanwhile, U.S. equity-based mutual funds continued to witness significant outflows and the comparatively safer ones remained the drawing cards. Moreover, nearly half of the broader mutual fund categories ended the month in the negative territory. Then again, most of the equity-based mutual fund sectors registered gains during the month. Let’s dig into the drivers and dampeners of February.

Major Market Impacts

Concerns over weak global growth played a major role in dragging most of the benchmarks to the negative zone in February. Yet another rate cut by the People’s Bank of China on Monday intensified worries over the country’s sluggish economy. The central bank lowered the reserve requirement ratio by 0.5% to 17% in order to boost monetary inflow. This was the fifth rate cut by the bank over the past one year.

On the domestic front, economic data was mixed over the month of February. Key manufacturing and servicing data for January was pretty discouraging. Though the unemployment rate declined to 4.9% in January, the number of jobs generated declined significantly to 151,000 from 262,000 in December. Moreover, waning consumer sentiment and decline in most of the home sales data had a negative impact on investors.

However, increased industrial production, higher key inflation data, and an upwardly revised fourth-quarter GDP rate boosted investor sentiment. As per the “second” estimate by the Bureau of Economic Analysis, the economy expanded by an annual rate of 1% in the fourth quarter, up from the consensus estimate of 0.4% growth. Fourth-quarter GDP data was revised upward from the previously estimated 0.7% rise.