Weekly Recap | February 13, 2023

February 6-10, 2023 Recap

Equities Backtrack

Worst Week for Stocks This Year
All three major U.S. equity indices were moderately lower last week with the S&P 500 and Nasdaq both posting their worst weekly performance since mid-December. Investor sentiment slipped amid mostly hawkish comments from numerous Federal Reserve officials. Chief among them was Fed Chairman Powell who said there’s a long road ahead in the fight against inflation and rates will continue to rise if inflation doesn’t decline sufficiently.

For the Week…
The S&P 500 fell 1.07%, the Dow Jones Industrial Average dipped 0.17% and the tech-heavy Nasdaq Composite lost 2.37%. The S&P 500 ended a three-week winning streak, and the Nasdaq ended a string of six straight weekly gains. Mid cap (-1.68%) and small cap
(-3.34%) stocks fell the most.

Consumer Sentiment Rises
The University of Michigan’s preliminary February reading of consumer sentiment rose to 66.4, topping forecasts for 65.0 and 64.9 in January. Following three monthly gains, the index is up 6% from a year ago, although remains 14% below levels two years earlier and 22% under its historical average since 1978.

Energy is Only Positive Sector
Ten of the 11 major S&P 500 sector groups ended negative last week, with Energy (+5.05%) the sole gainer. Prior week top gainers were the biggest laggards this past week with Communication Services (-6.59%) and Consumer Discretionary (-2.11%) falling the most. Utilities (-0.25%) and Healthcare (-0.19%) fell the least.

Treasury Yields Rebound
Treasury yields notably advanced last week with the yield on benchmark 10-year notes ending Friday at 3.736%, up nearly 21 bps (+0.21%) since last week. The U.S. WTI crude oil futures posted its largest weekly gain in four months ($6.33/barrel, +8.63%) after Russia followed through on a threat to cut crude oil production in response to western energy sanctions.

The Latest from @CeteraIM

Jobless Claims Top Estimates

Used Auto Prices Increase

Super Bowl Jersey Predictor

Economic Calendar

Monday, February 13
NY Fed Inflation Expectations.

Tuesday, February 14
Small Business Optimism, Consumer Prices.

Wednesday, February 15
Mortgage Activity, Retail Sales, Empire State Manufacturing, Industrial Production, Homebuilders’ Confidence, Business Inventories.

Thursday, February 16
Jobless Claims, Producer Prices, Housing Starts, Philadelphia Fed Manufacturing.

Friday, February 17
Import/Export Prices, Leading Economic Indicators.

After a strong labor market report on February 3, year-end expectations on where the Fed Funds rate has risen. The Implied Fed Funds Rate based on futures data rose to around 5% this week. The median Fed voting member's estimates was 5.1% in December. Market expectations are still lower than the Fed's expectations, which likely rose since their December meeting, judging by Fed officials’ speeches this week.

^{This report is created by Cetera Investment Management LLC. For more insights and information from the team, follow @CeteraIM on Twitter.}

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^Glossary

^{The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ.}

^{The S&P 500 is an index of 500 stocks chosen for market size, liquidity and industry grouping (among other factors) designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe.}

^{The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad based index}

^{The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe and is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.}

^{The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.}

^{The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe and is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership.}

^{The Bloomberg US Aggregate Bond Index, which was originally called the Lehman Aggregate Bond Index, is a broad based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government–related and corporate debt securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency) debt securities that are rated at least Baa3 by Moody’s and BBB- by S&P. Taxable municipals, including Build America bonds and a small amount of foreign bonds traded in U.S. markets are also included. Eligible bonds must have at least one year until final maturity, but in practice the index holdings have a fluctuating average life of around 8.25 years.}

^{The Bloomberg US Corporate High Yield Index measures the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt. Payment-in-kind and bonds with predetermined step-up coupon provisions are also included. Eligible securities must have at least one year until final maturity, but in practice the index holdings has a fluctuating average life of around 6.3 years.}

^{The Bloomberg US Municipal Bond Index covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds. Eligible securities must be rated investment grade (Baa3/BBB- or higher) by Moody’s and S&P and have at least one year until final maturity.}

^{The MSCI EAFE Index is designed to measure the equity market performance of developed markets (Europe, Australasia, Far East) excluding the U.S. and Canada. The Index is market-capitalization weighted.}

^{The MSCI Emerging Markets Index is designed to measure equity market performance in global emerging markets. It is a float-adjusted market capitalization index.}

^{The Bloomberg Commodity Index is a broadly diversified index that measures 22 exchange-traded futures on physical commodities in five groups (energy, agriculture, industrial metals, precious metals, and livestock), which are weighted to account for economic significance and market liquidity. No single commodity can comprise less than 2% or more than 15% of the index; and no group can represent more than 33% of the index.}

^{The S&P GSCI Crude Oil Index is a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market.}

^{The S&P GSCI Gold Index, a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark tracking the COMEX gold futures market.}

^{The U.S. Dollar Index is a weighted geometric mean that provides a value measure of the United States dollar relative to a basket of major foreign currencies. The index, often carrying a USDX or DXY moniker, started in March 1973, beginning with a value of the U.S. Dollar Index at 100.000.}