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Weekly Recap | May 16, 2022

Weekly Recap | May 16, 2022

May 16, 2022
Weekly Recap

May 9-13, 2022 Recap

Stocks Continue Downward Trend

S&P 500 Declines a Sixth Week
All three major U.S. equity indices rebounded strongly last Friday but ended the week sharply lower as investors expressed fears around the economic growth outlook. Wall Street remains concerned high annualized inflation and the Fed’s aggressive tightening policy needed to combat rising costs could weaken economic growth. The S&P 500 rebounded 2.39% on Friday, while the Nasdaq Composite (+3.82%) posted its best single-day gain since November 2020.

For the Week…
Despite Friday gains, the S&P 500 fell 2.35% last week to cap a sixth weekly loss, its longest losing streak since June 2011. The Dow Jones Industrial Average ended 2.14% lower on the week and the Nasdaq Composite lost 2.77%. The benchmark S&P 500 is more than 16% below its early January peak, while the Nasdaq fell deeper into a bear market, down over 27% from its November 2021 peak.

Consumer Prices Expand at Slower Pace
The headline consumer price index (CPI) rose 0.3% in April and is up 8.3% from a year ago, easing from March which saw a monthly increase of 1.2% and year-over-year increase of 8.5%. Travel category costs led the April CPI increase (as shown in the Chart of the Week below). Core CPI prices, which exclude volatile food and energy items, rose faster than expected last month (+0.6% vs. +0.4% expected) but slowed on a year-over-year basis to 6.2% from 6.5%.

Defensive Sectors Performs Best
10 of the 11 major sector groups posted negative returns last week, with Real Estate (-3.85%), Financials (-3.54%) and Technology (-3.47%) falling the most.  Communication Services (-0.16%) fell the least, along with Healthcare (-0.88%) and Utilities (-1.07%). Consumer Staples (+0.31%) was the sole weekly gainer. While Energy fell 2.61% last week, it remains this year’s best performing sector (+46.87% year to date).

Treasury Yields Ease
Treasury bond prices climbed last week on safe-haven buying, dampening the yield on benchmark 10-year Treasury notes to 2.930% from 3.126% the week prior. Separately, U.S. WTI crude oil futures finished the week at $110.49/barrel, slightly up from $109.77/barrel the week prior.

The Latest from @CeteraIM

CPI Inflation by Decade

Producer Prices Echoes CPI Slower Increase

Small Business Optimism Holds Steady

Economic Calendar

Monday, May 16
NY Empire State Manufacturing.

Tuesday, May 17
Retail Sales, Industrial Production, Business Inventories, NAHB Housing Market Index.

Wednesday, May 18
Mortgage Activity, Housing Starts, Building Permits.

Thursday, May 19
Jobless Claims, Philadelphia Fed Manufacturing Outlook, Existing Home Sales, Leading Indicators.

Friday, May 20
Advance Services PMI Report (Q1).

Headline inflation slowed on a year-over-year basis in April, but inflation is heating up in travel categories. Airfares surged 18.6% in April, after a 10.6% rise in March. Car rentals and hotel prices are both rising faster than overall inflation. There is a lot of pent-up demand for travel and the cost of a summer vacation is going to rise as a result.

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

About Cetera® Investment Management
Cetera Investment Management LLC is an SEC registered investment adviser owned by Cetera Financial Group®. Cetera Investment Management provides market perspectives, portfolio guidance, model management, and other investment advice to its affiliated broker-dealers, dually registered broker-dealers and registered investment advisers.

About Cetera Financial Group
“Cetera Financial Group” refers to the network of independent retail firms encompassing, among others, Cetera Advisors LLC, Cetera Advisor Networks LLC, Cetera Investment Services LLC (marketed as Cetera Financial Institutions or Cetera Investors), Cetera Financial Specialists LLC, and First Allied Securities, Inc. All firms are members FINRA / SIPC. Located at 655 W. Broadway, 11th Floor, San Diego, CA  92101.

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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.