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Weekly Recap | May 15, 2023

Weekly Recap | May 15, 2023

May 18, 2023
Weekly Recap

May 8-12, 2023 Recap

Equities Slip Second Straight Week

Small Caps Underperform
The S&P 500 finished with a fractional weekly loss for the 4th time in the last six weeks with renewed regional banking concerns and debt-ceiling worries serving as the biggest overhangs to investor sentiment. Little progress was made in debt ceiling negotiations according to reports through Friday, but Treasury Secretary Yellen said in a Saturday interview that she’s hopeful a deal will be reached to avoid a U.S. Treasury default. In a bit of relief, the much-anticipated Senior Loan Officer Opinion Survey (SLOOS) from the Fed did not show signs of stress beyond what had been expected.

For the Week…
The S&P 500 fell 0.24%, the Dow Jones Industrial Average fell 1.10% and the tech-heavy Nasdaq Composite gained 0.44%. Large caps fell the least while mid caps (-0.73%) and small caps (-1.04%) posted larger losses.

Consumer Sentiment Declines
The University of Michigan’s Consumer Sentiment Index declined to 57.7 in May (63.0 expected) from 63.5 the month prior. The reading reflects weakening current conditions and while year-ahead inflation expectations declined, and long-run inflation forecasts hit their highest in 12 years.

Communication Services Outshines
Eight of the 11 major sectors ended negative last week, with Energy
(-2.14%), Materials (-1.95%), and Financials (-1.29%) falling the most. Communication Services was the standout performer jumping 4.34%, with Consumer Discretionary (+0.63%) and Consumer Staples
(+0.01%) also following positive on the week. Communication Services (+27.49%) and Technology (+22.79%) are this year’s top performing sectors.

Treasury Yields Little Chaned
The yield on benchmark 10-year Treasury notes ended the week little changed, up less than 0.02% (3.463% vs. 3.445%). Yields and prices move in opposite directions. 

The Latest from @CeteraIM

Debt Ceiling Debate

Jobless Claims Rise

S&P 500 Nearly Flat over Two Years

Economic Calendar

Monday, May 15
Empire State Manufacturing Activity.

Tuesday, May 16
Retail Sales, NY Fed Services Activity, Industrial Production, Business Inventories, Homebuilder Confidence.

Wednesday, May 17
Mortgage Activity, Housing Starts, Building Permits.

Thursday, May 18
Jobless Claims, Philadelphia Fed Manufacturing, Existing Home Sales, Leading Economic Indicators.

Friday, May 19
No Major Releases.

The pace of inflation slowed in April, as measured by the consumer price index (CPI). CPI inflation slowed to 4.9% year-over-year last month, the first reading below 5% since 2021. Core CPI, which excludes food and energy categories, increased 5.5% year-over-year. While inflation is slowing from 2022 peak levels, it remains stubbornly high when compared to the Fed's long-term goal of 2%. The good news is that inflation has slowed much quicker when measured by the trailing 3-, 6-, and 9-month annualized figures.

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.