- J. J. Wenrich CFP®
Weekly Market Performance – Markets Finish Mixed Amid Geopolitical and Inflation Concerns
U.S. and International Equities
Markets Finish Mixed
As has been the major market theme since late February, the Russia-Ukraine conflict and its effects on inflation added to this year’s concerns over monetary policy and continued to weigh on investor sentiment. Amid the geopolitical concerns in Eastern Europe, investors added additional risk to emerging market names per the MSCI EM.
Real estate led all sectors this week and has posted an excellent showing over the past month. Amid increasing interest rates, LPL Research has been positive on this sector given the economic reopening, attractive valuations, healthy credit markets, as well as real estate’s ability to weather inflation.
Fixed Income Lower
The Bloomberg Aggregate Bond Index finished higher, reversing its downward trend in 2022. High-yield corporate bonds, as tracked by the Bloomberg High Yield index, also followed suit as traders took a shine to the asset class amid relatively more attractive high yield bond spreads vs. Treasuries.
After ending last week higher, crude oil lost ground this week on the back of demand concerns amid the highly uncertain geopolitical landscape in Eastern Europe and lockdowns in China. WTI crude oil dropped below $100 per barrel this week for the first time since the Russian invasion. In addition, natural gas prices finished higher following last week’s double-digits performance, while the major metals, gold and silver, finished the week lower.
Economic Weekly Roundup
Largest Year-over-Year Increase for PCE
February’s Personal Consumption Expenditures (PCE) was reported at its highest year-over-year rate since 1983. That being said, the annual reading came in below economist expectations. In addition, core PCE, excluding fuel and food, also came in below economist expectations. Increasing prices put a dent in consumer spending, which increased below economists’ expectations.
Consumer Confidence Increases Amid Inflation
The Conference Board’s March Consumer Confidence reading inched higher from last month’s 12-month low and surpassed economists’ expectations. Presently, consumers are facing the highest inflation readings in 40 years, but given record-low continuing claims and strong job numbers, consumers, for now, appear able to weather the current economic climate.
Initial Claims Higher Than Expected; Continuing Claims Reach Record Low
Initial claims for unemployment insurance for the week ending March 26 came in above last week’s total as well as below economists’ expectations. In addition, continuing claims declined from the prior week, this was below economists’ estimates as well and reached a record low not seen since 1969. The data continues to illustrate a tight labor market that is unlikely to dissuade the Fed from focusing on the inflation side of its mandate in the rest of 2022.
The following economic data is slated to be released during the week ahead:
Monday: February durable and factory orders
Tuesday: March total light vehicle sales, PMI composite, Institute for Supply Management Non-Manufacturing report, February trade balance
Wednesday: Federal Open Market Committee March minutes
Thursday: Weekly initial and continuing unemployment claims, February consumer credit
Friday: February wholesale inventories
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 or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
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. All market and index data comes from FactSet and MarketWatch.
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. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
U.S. Treasuries may be considered “safe haven” investments but do carry some degree of risk including interest rate, credit, and market risk. 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.
For a list of descriptions of the indexes referenced in this publication, please visit our website at lplresearch.com/definitions.
This Research material was prepared by LPL Financial LLC.
Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC).
Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL affiliate, please note LPL makes no representation with respect to such entity.
Not Insured by FDIC/NCUA or Any Other Government Agency
Not Bank/Credit Union Guaranteed
Not Bank/Credit Union Deposits or Obligations
May Lose Value
For Public Use – Tracking # 1-05263646