Weekly Recap | March 6, 2023

February 27 - March 3, 2023 Recap

Equities Rebound as Yields Ease

S&P 500 Snaps Three-Week Losing Streak
U.S. equities finished the week with strong gains on Friday as investors re-assess their outlooks for peak terminal interest rates of at least 5.5%. Wall Street is appearing more comfortable with the Fed’s higher-for-longer tightening cycle sparked by stronger economic data. During the week, Fed Governor Waller endorsed a higher peak rate should positive economic data continue while Atlanta Fed President Bostic said he continues to favor a smaller 0.25% rate increase later this month.

For the Week…
The S&P 500 gained 1.96% to end Friday back above 4,000. The Dow Jones Industrial Average rose 1.75% to break a four-week losing streak and the tech-heavy Nasdaq Composite surged 2.61%. The broad market S&P 500 closed out a volatile February on Tuesday, down 2.44% for the month.

Fewer Jobless Claims
New first-time claims for unemployment benefits fell by 2,000 last week to 190,000, beating expectations of 196,000. Unemployment claims remain low on a historical basis. For context, the weekly average over the last five calendar years (2015-2019) of the prior expansion was 244,000.

Materials Gained Most
Nine of the 11 major S&P 500 sector groups posted gains last week, led by Materials (+4.20%), Industrials (+3.34%) and Communication Services (+3.28%). Technology (+2.94%) and Healthcare (+0.52%) rose the least. The lagging sectors were Consumer Staples (-0.32%) and Utilities (-0.51%). The top two year-to-date (YTD) gainers are Consumer Discretionary (+13.19%) and Technology (+12.66%).

Treasury Yields Edge Higher for the Week
Treasury yields climbed a fourth week, with the yield on benchmark 10-year notes ending Friday at 3.971%, up less than 0.03% for the week. The 10-year yield, however had finished above 4.07% on Thursday before falling more than 0.10% on Friday.

The Latest from @CeteraIM

Growth in Apartment Rents Slow

Mortgage Purchase Applications Drop 

Services Activity Expands

Economic Calendar

Monday, March 6
Factory Orders.

Tuesday, March 7
Wholesale Trade Sales/Inventories, Consumer Credit.

Wednesday, March 8
Mortgage Activity, ADP Private Payrolls, Trade Deficit, JOLTS Job Openings, Fed Beige Book.

Thursday, March 9
Jobless Claims.

Friday, March 10
Nonfarm Payrolls, Unemployment Rate, Average Hourly Earnings, Federal Budget Deficit.

Markets are pricing in higher for longer interest rates. Bond yields are rising across the curve and the 10-year Treasury yield rose above 4% last week for the first time since November. The path forward for bond yields will depend on how quickly inflation slows.

^{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.}