Weekly Recap | March 14, 2022

March 7-11, 2022 Recap

Stocks Slump as Russian Aggression Intensifies

Worst Week Since January
All three major equity indices posted another set of back-to-back weekly losses with the S&P 500 capping its worst weekly performance since January. Investors sought safer havens away from equities as consumer inflation accelerated a sixth consecutive month, while initial ceasefire talks between Ukraine and Russia proved unproductive. Global markets experienced intense daily volatility amid the worsening war in Ukraine and heightened sanctions against Russia have spurred further growth and inflation risks. President Biden on Friday called on Congress to join Western allies to end all normal trade relations with Russia.

For the Week…
Despite a 2.6% gain on Wednesday, the S&P 500 netted a 2.84% weekly loss, while the Dow Industrials lost 1.99%. The tech-heavy Nasdaq Composite retreated 3.51% on the week despite a 3.6% Wednesday gain. Small cap stocks outperformed with a smaller 1% weekly loss.

Jobless Claims Remain Near Pandemic Lows
Initial claims for state unemployment benefits increased by 11,000 to 227,000 last week, topping projections for a smaller increase to 217,000. Continuing claims rose by 25,000 to 1.494 million. Jobless claims remain near pandemic lows, with the four-week average of 231,250 at nearly the lowest level in 50 years.  Separately, job openings are at a record level (two for every unemployed person), while layoffs are at record lows.

Energy Still the 2022 Sector Star
All 11 major sector groups finished the week negative except Energy (+1.98%).  Consumer Staples (-5.77%), Technology (-3.79%) and Communication Services (-3.13%) posted the largest losses while Materials (-1.46%) and Utilities (-0.68%) declined the least.

Treasury Prices Fall
Treasury prices declined as yields rose sharply. The yield on benchmark 10-year Treasury notes climbed nearly 28 basis points (+0.28%) to end Friday at 2.002%. The U.S. Dollar Index strengthened by 0.48% last week reaching a fresh five-year high. The dollar index is up 2.60% over the past three weeks. U.S. WTI crude oil futures also saw intense volatility, before ending the week with a 5.5% loss at $109.33/barrel. U.S. crude had swung to as high as $130/barrel to as low as $103. On Tuesday, President Biden announced a U.S. ban on importing Russian crude oil, liquified natural gas and coal.

The Latest from @CeteraIM

Volatility Beyond Stocks

Inflationary Leadership

S&P 500 Wild Swings

Economic Calendar

Monday, March 14
No Major Releases.

Tuesday, March 15
Producer Prices, Empire State Manufacturing.

Wednesday, March 16
Mortgage Activity, Retail Sales, Import/Export Prices, Business Inventories, Housing Market Index, FOMC Rates/Policy Decisions
(2pm ET).

Thursday, March 17
Jobless Claims, Housing Starts, Building Permits, Philly Fed Manufacturing, Industrial Production.

Friday, March 18
Existing Home Sales, Leading Indicators.

Consumer prices surged in February. Headline CPI inflation rose 0.8% last month and 7.9% year-over-year. Inflation is at the highest level since 1982. Excluding food and energy, core CPI rose 6.4% year-over-year, which is also the highest since 1982. The Federal Reserve is widely expected to raise interest rates 25 bps next week. There might be as many as six 25 bps rate hikes by year-end to combat inflation.

^{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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^Glossary

^{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 Barclays 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 Barclays 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 Barclays 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.}