Weekly Recap | March 7, 2022

March 10, 2022

Weekly Recap

February 28 - March 4, 2022 Recap

Stocks Fall as Oil Rises

Equity Markets Pull Back
All three major equity indices fell last week as the war in Ukraine continues. Federal Reserve Chair Jerome Powell testified in his semi-annual trip to Capital Hill last week and reaffirmed the Feds intention to raise interest rates this month. However, the geopolitical events will alter the Fed’s game plan. It was widely expected it would raise short-term interest rates by 0.50%, but now appears to be toning that down to only 0.25% in March. The Fed will adjust its plans as the developments in Ukraine evolve. There are fears that the war will cause high inflation due to a jump in oil prices, which would also slow economic growth.

For the Week…
The S&P 500 lost 1.24%, the Dow Industrials fell 1.23% and the tech-heavy Nasdaq Composite dropped 2.76%. Large cap growth stocks
(-2.49%) dropped more than large cap value stocks (-0.45%). In bonds, the aggregate bond market gained nearly 1%, while high yield bond markets fell slightly. International developed markets were the big loser as the EAFE index fell 6.51%. Emerging markets only fell by 2.29%.

Jobs Growth Accelerates
February jobs growth accelerated to its fastest pace in seven months. Nonfarm payrolls increased by 678,000 last month, easily beating expectations for an increase of 400,000. The unemployment rate fell to a new pandemic low of 3.8%. The jobs report confirms that the labor recovery remains strong.

Energy Sector Gains the Most
Six of the 11 major sector groups finished the week with gains, with Energy (+9.31%), Utilities (+4.96%) and Real Estate (+1.80%) gaining the most. Financials (-4.79%), Information Technology (-3.01%) and Communication Services (-2.66%) fell the most.

Treasury Prices Rise
Treasury prices rose last week, sending the yield on benchmark
10-year Treasury notes lower to end Friday at 1.727%. Yields fall when bond prices rise. The U.S. Dollar Index strengthened by 2.1% last week. U.S. WTI crude oil futures rallied 26.3% last week to end Friday at $115.68/barrel as the war in Ukraine continues to cause uncertainty around oil prices.

The Latest from @CeteraIM

Oil Prices Surge

Labor Market Recovery

Housing Affordability

Economic Calendar

Monday, March 7
Consumer Credit.

Tuesday, March 8
Small Business Optimism, U.S. Trade Deficit, Wholesale Trade Sales and Inventories.

Wednesday, March 9
Mortgage Activity, JOLTS Job Openings.

Thursday, March 10
Jobless Claims, Consumer Prices, Federal Budget Deficit.

Friday, March 11
Consumer Sentiment.

Gas prices are about to get a lot more expensive with oil near $120/barrel. The average price of retail gas is $4/gallon nationally, or 14.9% of average hourly earnings. For perspective, the average price of a gallon of gas is 12.5% of average hourly earnings since 1976. Gas prices would need to reach $6/gallon to be as expensive relative to wages as the peak in 2008.

^{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.}

^{All economic and performance information is historical and not indicative of future results. Investors cannot directly invest in unmanaged indices. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability, and differences in accounting standards.}

^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.}

^{The S&P MidCap 400 provides investors with a benchmark for mid-sized companies. The index, which is distinct from the large-cap S&P 500, is designed to measure the performance of 400 mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment.}

^{The S&P SmallCap 600 seeks to measure the small-cap segment of the U.S. equity market. The index is designed to track companies that meet specific inclusion criteria to ensure that they are liquid and financially viable.}