top of page
  • J. J. Wenrich CFP®

Weekly Market Performance – Markets Finish Higher As Fed Keep Rates Unchanged

Markets Blog

Index Performance

U.S. and International Equities

Markets Higher

All major market indexes ended higher as the Federal Reserve kept rates unchanged. The European Central Bank increased interest rates this week as expected. Moreover, inflationary conditions in the U.S. are showing steady improvement following the Federal Reserve’s hawkish policy stance.

Market breadth conditions continue to improve. Goldman Sachs recently noted that 397 constituents of the S&P 500 Index are higher versus the year-to-date average of 259 stocks amid the over 15% gain in this year’s S&P 500 Index. Some investors believe the economy could witness a soft landing given better-than-expected payrolls, removal of the debt ceiling overhang, and a pause on interest rate hikes.

Bank of America reported that U.S. equity funds have attracted $38 billion during the past three weeks, which represents the strongest stretch since last October. Money market funds witnessed their first outflow in roughly two months. The bank noted that U.S. value mutual funds witnessed their first positive inflows in 13 weeks, breaking their longest outflow streak since June 2019.

Small-cap mutual funds attracted $4.8 billion in the latest week, which represents the largest inflow since last June. Technology fund flows are the standout as they have attracted $19 billion in the past couple of months, representing their best run since March 2021. Markets have witnessed a notable improvement in market breadth and recent fund flow data support the recent market moves.

Fixed Income Higher

The Bloomberg Aggregate Bond Index finished higher this week amid high profile global central bank meetings. High-yield credit also had a positive week on the back of higher equity prices and continues to be a leader in the fixed income asset class year to date. High yield has performed well despite the traditional reasons the asset has struggled amid Federal Reserve rate hikes along with default rates increasing and tighter lending standards. LPL Research believes that valuations aren’t compelling enough given the aforementioned risks.

As expected, the U.S. Treasury Department has started to increase the issuance size of Treasury Bills (T-bills) in an effort to replenish its general account as well as fund government operations following the resolution of the debt ceiling standoff. Recent auctions have been well supported with demand from foreign investors significantly higher than in previous years, which we expect to continue due to higher U.S. rates.

Commodities Mixed

Energy prices ended higher this week as natural gas prices continue to rally from this year’s pullback. The major metals (gold, silver, and copper) finished the week mixed. Prices for most commodities have moved lower year to date, with coal, natural gas, and nickel among 2023’s big decliners. So far, this year’s major commodity advancers have been feeder cattle, sugar, and cocoa amid supply shortages. Gold has also bucked the trend following increasing global central bank demand.

Economic Weekly Roundup

Federal Reserve Pauses

The Federal Open Market Committee (FOMC) kept rates unchanged Wednesday following the conclusion of its two-day meeting, but communicated a hawkish bias to future interest rate decisions. With a slight tweak, the FOMC statement was modestly hawkish but still communicated to investors that the committee is data-dependent when “determining the extent of additional policy firming that may be appropriate.” Notably, they do not say more tightening “will” be appropriate.

European Central Bank Remains Hawkish

The European Central Bank raised borrowing costs to their highest level in 22 years and left the option open for additional rate hikes, extending the bank’s fight against high inflation even as the region’s economy is on shaky ground. Two quarters of gross domestic product (GDP) contraction from Germany placed the Eurozone into a shallow recession last winter, though the nation’s economy could still produce modest growth in 2023. That being said, the region’s unemployment is at record lows, while wage growth is picking up amid labor shortages.

U.S. Inflation

Inflation is getting closer to the Federal Reserve’s (Fed) target, but some prices are still frustratingly sticky. Highlights from the CPI report (May): Consumer prices rose 0.1% in May, pulling the annual rate of inflation down to 4.0%, the lowest annual rate since March 2021.The largest contributor to the monthly increase in prices were shelter costs.

Energy prices were the largest drag, falling 3.6% in May. Prices at restaurants are still rising at a fast clip, indicating consumer demand is still strong for restaurant service. The overall theme in recent months has been strong consumer demand for experiences over items, and we are seeing that play out in consumer pricing dynamics.

German Inflation

German inflation eased in the month of May. The nation’s CPI was 6.1% year over year in May, which is down from April’s 7.2%. Like much of Europe, German inflation is driven by persistently high prices for energy and food. Energy rose 2.6% year over year and continues to be affected by geopolitical events such as the Russia-Ukraine conflict and production decisions coming from the Middle East. Food prices also remain historically elevated, sitting at a 14.9% increase year over year.

Weekly Unemployment

Initial claims for the latest week came in above economists’ consensus expectation and at the same level as the prior week. Meanwhile, continuing claims, which are tallied with a one-week lag relative to initial filings, came in above the prior week’s levels, but below economists’ expectation. The labor market is expected to further loosen over the coming months as companies respond to slowing demand, partly driven by the Fed’s tighter monetary policy.

Week Ahead

The following economic data is slated for the week ahead:

  • Monday: NAHB Housing Market Index (Jun)

  • Tuesday: Building permits (Jun), housing starts (Jun)

  • Thursday: Weekly initial and continuing unemployment claims, current accounts (Q1), existing home sales (May), leading indicators (May),

  • Friday: PMI Composite (Jun), S&P Global PMI Manufacturing (Jun), S&P Global PMI Services (Jun)


This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments. For more information on the risks associated with the strategies and product types discussed please visit

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Investing involves risk including the loss of principal. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

Bond yields are subject to change. Certain call or special redemption features may exist with could impact yield. High yield/junk bonds (grade BB or below) are not investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

The fast price swings in commodities will result in significant volatility in an investor’s holdings. Commodities include increased risks, such as political, economic, and currency instability, and may not be suitable for all investors.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

Securities and advisory services offered through LPL Financial, a registered investment advisor and broker-dealer. Member FINRA/SIPC.

For Public Use Tracking 1-05372366

Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Deposits or Obligations |Not Bank/Credit Union Guaranteed | May Lose Value

For a complete list of descriptions of the indexes and economic terms referenced in this publication, please visit our website at


bottom of page