Weekly Market Performance – Markets Finish Mixed Amid Geopolitical and Inflation Worries
U.S. and International Equities
Markets Finish Mixed
This week, the markets ended mixed. The Russia-Ukraine conflict and its effects on inflation had added to existing monetary policy uncertainty giving market participants pause during the last two months. This week, traders added risk to portfolios in mostly large U.S. company names amid pockets of increasingly attractive equity valuations and oversold conditions.
Energy, which was last week’s laggard, continued its leadership among sectors this week. This sector has dominated all S&P 500 Index sector returns year to date on the back of higher oil prices. The Materials and Utilities sectors had strong showings this week, as these sectors appear to be inflation-resistant to some traders.
Fixed Income Lower
The Bloomberg Aggregate Bond Index finished lower and continuing its downward trend in 2022. High-yield corporate bonds, as tracked by the Bloomberg High Yield index, fared no better as traders continue to weigh the effects of inflation on fixed income even as high yield bonds are showing somewhat stretched spreads versus treasuries.
After pulling back for two straight weeks, crude oil continued its trek higher on the back of supply concerns amid the geopolitical landscape in Eastern Europe. In addition, natural gas prices rallied double-digits this week. Additionally, the major metals, gold and silver, finished the week higher as traders bid commodities higher on inflation worries.
Economic Weekly Roundup
Durable Goods Decline
U.S. factory orders for durable goods dropped more than economists expected in February. This breaks a five month long streak of increases. Bookings for all durable goods declined over 2%, with economists expecting only a fractional drop in orders. Shipments of capital goods excluding aircraft and defense rose 0.5 percent, indicating that business investment will likely add to GDP growth this quarter.
Home Sales Soft
U.S. new home sales declined in February. This represents a second straight month of decline, suggesting that relatively high prices and rising mortgage rates could be keeping prospective buyers away from the market. This being said, the median sales price of a new home increased over 10% in February from a year earlier to over $400,000.
Jobless Claims Better than Expected
Initial claims for unemployment insurance for the week ending March 19 came in below last weeks’ total as well as below economists’ expectations. In addition, continuing claims declined from the prior week, this was below economists’ estimates as well. The data continues to illustrate a tight labor market that is unlikely to dissuade the Fed from focusing on the inflation side of its mandate in the rest of 2022.
The following economic data is slated to be released during the week ahead:
Monday: February wholesale inventories,
Tuesday: Job Opening and Labor Turnover Survey (JOLTS) job openings, January Federal Housing Finance Agency Home Price Index, S&P Case-Shiller Home Price Index, March consumer confidence
Wednesday: March ADP employment survey, Q4 GDP (revised)
Thursday: Weekly initial and continuing unemployment claims, February personal consumption expenditure and personal income
Friday: March employment report, March Markit and Institute for Supply Management PMI manufacturing, February construction spending,
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