Weekly Recap | March 27, 2023

March 20-24, 2023 Recap

Volatile Week Ends Positive

Equities Rise a Second Week
All three major U.S. equity indices ended with weekly gains despite increased market volatility surrounding the global banking turmoil and another interest rate hike from the Federal Reserve. On Wednesday, the Fed voted unanimously to raise rates by 0.25% to a range of
4.75%-5.00%, its ninth increase since March 17, 2022. Positive economic data, including a 14.5% spike is existing home sales, helped dampen regional banking fears, while divergent comments surrounding FDIC deposits insurance stirred uncertainty. Any increase of FDIC deposit insurance coverage above the current $250,000 must be approved by Congress, not just by the Treasury Department.

For the Week…
The S&P 500 gained 1.41%, the Dow Jones Industrial Average rose 1.18% and the tech-heavy Nasdaq Composite gained 1.68%, extending its YTD gain to 13.22%. Large cap growth stocks (+1.64%) handily outperformed their value counterparts (+1.00%).

U.S. PMIs Surprise Higher
S&P Global’s advance March purchasing manager’s index (PMI) composite reading of U.S. services and manufacturing activity expanded further to reach 53.3, its highest level since May 2022. The reading topped projections for a decline to 47.5 and follows 50.1 in February (50.0 is the dividing line between expansion and contraction). The surprise PMI increase is now broadly consistent with annualized GDP growth near the 2% level, casting a more positive picture of economic resilience.

Wide Ranging Sector Performance
Nine of the 11 major S&P 500 sector groups ended with gains last week. Communication Services (+3.40%) was the top performer for a second straight week, followed by Energy (+2.29%) and Materials (+2.16%). Consumer Discretionary (+0.44%) gained the least, while Real Estate (-1.30%) and Utilities (-1.16%) posted weekly losses.

Treasury Yields Decline
Despite intra-week volatility, Treasury yields were little changed last week. The yield on benchmark 10-year notes ended Friday at 3.382%, down just fractionally from 3.388% the Friday prior.

The Latest from @CeteraIM

Money Market Balances Reach New Record

Fed Raises Rates Ninth Time

Treasury Yields Retreat

Economic Calendar

Monday, March 27
No Major Releases.

Tuesday, March 28
Advance Goods-only Trade Balance, Retail/Wholesale Inventories, S&P Case-Shiller Home Prices, Consumer Confidence.

Wednesday, March 29
Mortgage Activity, Pending Home Sales.

Thursday, March 30
Jobless Claims, Q4 GDP Revision.

Friday, March 31
Personal Income & Spending, PCE Prices, Chicago Business Confidence, Consumer Sentiment.

Labor costs are running hot, but productivity is declining. We haven’t seen a divergence like this since the late 1970s and early 1980s. We anticipate a rise in efficiency investment to boost productivity and offset labor cost inflation from slowing labor force growth..

^{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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^{No independent analysis has been performed and the material should not be construed as investment advice. Investment decisions should not be based on this material since the information contained here is a singular update, and prudent investment decisions require the analysis of a much broader collection of facts and context. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The opinions expressed are as of the date published and may change without notice. Any forward-looking statements are based on assumptions, may not materialize, and are subject to revision.}

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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 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.}