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Weekly Recap | February 6, 2023

Weekly Recap | February 6, 2023

February 09, 2023
Weekly Recap

January 30 - February 3, 2023 Recap

Equities End Mostly Higher

Nasdaq Rises Fifth Straight Week
U.S. stocks were mostly higher last week with the S&P 500 and Nasdaq Composite trimming weekly gains on Friday after overly hot nonfarm payrolls stirred fears that the Fed will keep interest rates higher for longer. As widely expected, Fed policymakers raised rates by 0.25% on Wednesday to a range of 4.50% - 4.75% but the strong 517,000 increase in January hiring (185,000 forecasted) prompted concerns the Fed may need to raise rates above 5%.

For the Week…
The S&P 500 gained 1.64%, the Dow Jones Industrial Average fell 0.15% and the tech-heavy Nasdaq Composite jumped 3.33%. Small cap stocks outperformed with the Russell 2000 up 3.90%. Bonds rose another week, albeit the Bloomberg U.S. Aggregate Bond Index gained just 0.03%, extending its year-to-date gain to 3.02%.

ISM Services Rebounds
The Institute for Supply Management’s (ISM) closely watched services PMI activity index climbed well above 50 in January (55.2 from 49.2), marking a return into expansion. The reading had been in contraction (below 50) in December. The January rebound was led by New Orders (60.4 from 45.2) while Prices eased somewhat to 67.8 from 68.1.

Communication Services Tops Leaderboard
Eight of the 11 major S&P 500 sector groups posted gains last week, led by Communication Services (+5.28), Technology (+3.76%), and Consumer Discretionary (+2.25%). Consumer Staples (+0.64%) and Materials (+0.03%) gained the least while Energy (-5.90%) and Utilities (-1.45%) led the downside. Communication Services (+21.11%) has gained the most this year.

Treasury Yields Rebound
Treasury yields nudged slightly higher last week, with the yield on benchmark 10-year notes ending Friday at 3.53%, up just 0.01% on the week. U.S. WTI crude oil futures declined $6.29 (-7.9%) last week, closing Friday at $73.39/barrel.

The Latest from @CeteraIM

Wage Growth Cools

Auto Sales Rebound

Apartment Rents Fall

Economic Calendar

Monday, February 6
No Major Releases.

Tuesday, February 7
U.S. Trade Deficit, NY Fed Inflation Outlook, Consumer Credit.

Wednesday, February 8
Mortgage Activity, Wholesale Inventories.

Thursday, February 9
Jobless Claims.

Friday, February 10
Consumer Sentiment, Federal Budget Deficit.

Money market assets are at a record high. Solid yields on short-term cash equivalents will likely keep these assets elevated. If money market assets are going to decline, either yields need to fall sharply or a sustained bull market in stocks draws cash off the sidelines.

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.