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Weekly Recap | September 26, 2022

Weekly Recap | September 26, 2022

September 26, 2022
Weekly Recap

September 19-23, 2022 Recap

Another Down Week for Stocks

Equities Approach June Lows
The rout in U.S. stocks deepened last week with the benchmark S&P 500 posting its fifth weekly loss in six weeks and briefly breached its June closing low on Friday. The S&P 500 was down by more than 4% for the third week over the same period, while the Nasdaq Composite was off by more than 5% for a second-straight week. The Federal Reserve raised interest rates by 0.75% on Wednesday to a new range of 3.00% - 3.25%. Fed policymakers’ median rate forecasts now indicate 4.4% by the end of 2022 and 4.6% in 2023.

For the Week…
The S&P 500 sank 4.63%, the Dow Jones Industrial Average fell 4.00% and closed below 30,000 level for the first time since June 17. The tech-heavy Nasdaq Composite lost 5.06%.

Services PMI Improves
S&P Global’s preliminary U.S. Services purchasing manager’s index (PMI) activity reading rose to 49.2 from 43.7 in August, its highest reading since June. The Prices Charged component led the improvement, falling to the lowest level since January 2021. However, the overall PMI level still remains in contraction as readings above 50 signal expansion.

Defensive Sectors Fall the Least
All 11 S&P 500 sector groups posted negative returns again last week, with Consumer Staples (-2.15%), Utilities (-2.99%) and Healthcare
(-3.36%) having the smallest losses. Energy (-9.00%), still this year’s biggest gainer, fell the most last week, trimming its YTD gain to 32.34%. Consumer Discretionary (-7.01%) and Real Estate (-6.37%) also saw steep losses last week.

Treasury Yields Rise More
Treasury yields surged last as the Fed raised interest rates, with the 10-year benchmark Treasury yield climbing 0.24% to end Friday at 3.692%. The yield on policy-sensitive two-year Treasury notes surged above 4.28% to reach a fresh 15-year high. The U.S. Dollar Index surged by 3.12% last week. 

The Latest from @CeteraIM

New 2009 High on Bearish Sentiment

Bond Yields Surge

Indicators Fall Sixth Month

Economic Calendar

Monday, September 26
Chicago Fed National Activity.

Tuesday, September 27
Durable & Capital Goods Orders, S&P Case-Shiller Home Prices, Consumer Confidence, New Home Sales.

Wednesday, September 28
Mortgage Applications, Goods-only Trade Balance, Pending Home Sales.

Thursday, September 29
Jobless Claims, 2Q GDP (third/final estimate), Personal Consumption, GDP Prices.

Friday, September 30
Personal Income/Spending, PCE Prices, MNI Chicago-area PMI, Consumer Sentiment.

Ocean freight costs are slowing rapidly, signaling improving supply chains and cooling inflationary pressures. The Shanghai Containerized Freight Index, a proxy for shipping costs from China, is down 55% from the January high and is the lowest since December 2020.

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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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.