Market Levels
U.S. equities erased most of this year’s gains impacted by Federal Reserve Chairman, Jerome Powell’s comments at the semi-annual monetary policy report to congress. As well as the 16th largest bank in the nation, Silicon Valley Bank, shutting down after failing to raise capital. The Financial sector dropped an astounding 8% while U.S. regional banks suffered their worst losses since the 2008 financial crises. Lastly, it is important to note that The Volatility Index (VIX) reached a new 2023 high near 29 before settling under 25. This index is a popular measure of the stock markets expectation of volatility of the S&P 500 index. Investors use the VIX to gauge level of fear or risk in the markets when making investment decisions.
Year to date (YTD) (a)
S&P 500 +0.58%
NASDAQ +6.42%
Dow 30 -3.73%
Sector Performance – 3 Month (b)
Communication Services +3.97%
Information Technology +3.73%
Industrials -0.03%
Energy -0.11%
Consumer Discretionary -0.67%
Materials -3.25%
Financials -4.55%
Real Estate -5.56%
Consumer Staples -6.08%
Utilities -9.09%
Health Care -10.05%
Treasury Yield (10 years) (a)
3.48%
The treasury yield plummeted on Friday due to bank contagion fears and the labor market data hinting at the idea of cooling inflation.
US National Debt (c)
$31,612,000,000,000
U.S. Dollar Index (a)
103.88
The Dollar Index hit highs not seen since January 6th at 105.43 during the intrasession on Tuesday last week.
Last Week’s News
The Semiannual Monetary Policy Report (d)
Jerome Powell, Chairman of the Federal Reserve, issued hawkish comments last week during his two-day testimony to The House Financial Services Committee and Senate Banking, House, and Urban Affairs committee.
Specifically, Jerome Powell made remarks on how the central bank may need to increase the pace of interest rate hikes again, “The latest economic data have come in stronger than expected, which suggest that the ultimate level of interest rates is likely to be higher than previously anticipated” Jerome commented. Furthermore, “if the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”
The Fed has implemented 8 consecutive interest rate hikes so far since March 2022. Takeaways from this report are that inflation is not done and the Federal Reserve’s terminal interest rate will most likely be higher.
Jobs Report (d)
Rose 311k in February (above 225k estimates)
Nonfarm payrolls for February beat estimates but came in below Januarys strong 517k job report. Other important data points hinting at cooling inflation and an easing labor market was the unemployment rate bounced to 3.6% above estimates of 3.5% and last month’s 3.4%. Average hourly earnings came in lighter than expected increasing by 0.24% vs expectations of 0.4%. Lastly, wages increased by 4.6% from a year ago, compared to the 4.8% estimate.
Your Money
In conclusion, last week was a pivot from the bullish case the markets saw in January. Volatility has started to pick up as many catalysts continue to drive the market in both directions.
After a rollercoaster ride in the markets last week, investors get little chance to recover as more important economic data is scheduled to be released this week. The banking industry will be in full focus this week as well as investors look for a clearer picture of the U.S. regional banks.
Quote (e)
“The difference between death and taxes is death doesn’t get worse every time congress meets”
– Will Rogers
(a) Yahoo Finance
(c) US Debt Clock
(d) CNBC Economy
(e) Brainyquote
