Weekly Recap | April 4, 2022

March 28 - April 1, 2022 Recap

Stocks Rally Third Week

Broad Market Stocks Inch Higher
The S&P 500 capped a third week of gains, albeit barely – as a final hour surge on Friday was buoyed by optimism over a solid March payrolls report and a pullback in crude oil prices below $100/barrel. Investor optimism was however held in check on the flip side argument that strong employment reinforces a more aggressive policy stance by the Federal Reserve. The current outlook calls for at least six more interest rate hikes this year.

For the Week…
The S&P 500 edged 0.08% higher, following two respective weekly gains of 1.8% and 6.2%. The Dow Jones Industrial Average fell 0.12%, while the Nasdaq Composite climbed 0.66%. Small cap stocks (Russell 2000, +0.68%) outperformed, led by growth-oriented companies. Small cap growth stocks rose 1.59%, whereas small cap value companies fell 0.13%.

ISM Manufacturing Surprises Lower
The Institute for Supply Management’s manufacturing activity index slowed to an 18-month low of 57.1 last month, missing expectations for a small increase to 59.0 from 58.6. The index is still in expansion mode, however, as readings below 50 signal contraction. Component readings for Prices Paid jumped to a nine-month high of 87.1, significantly higher than forecasts for 80 while New Orders fell to 53.8 from 61.7, notably lower than 58.5 expected.

Real Estate Rebounds
A slim six majority of the 11 major sector groups posted gains last week led by Real Estate (+4.53%) and classic defensive sectors Utilities (+3.74%) and Consumer Staples (+2.36%). Technology (+0.12%) climbed the least, while Financials (-3.25%), Energy (-2.38%) and Industrials (-1.47%) declined the most. Energy gains continue to dominate this year, up 40.21% YTD.

Treasury Prices Drop
Treasury prices were volatile last week with benchmark 10-year notes paring recent losses to send its yield marginally lower. Yields decline as prices rise. For the week, the yield on 10-year Treasury notes declined by nearly 11 basis points to 2.376%. The U.S. Dollar Index declined 0.16%, snapping a four-week rally. U.S. WTI crude oil futures declined nearly 13% to end Friday at $99.27/barrel after President Biden announced plans to withdraw 180 million barrels of crude oil from U.S. strategic reserves in one million barrel daily increments over the next six months.

The Latest from @CeteraIM

Jobs Growth Swells in March

Jobless Claims Increase

Consumer Spending Shifts

 The Week Ahead Video

Economic Calendar

Monday, April 4
Durable/Capital Goods Orders.

Tuesday, April 5
U.S. Trade Deficit, ISM Services Activity, S&P Global US Services PMI.

Wednesday, April 6
Mortgage Activity, FOMC March Meeting Minutes.

Thursday, April 7
Jobless Claims, Consumer Credit.

Friday, April 8
Wholesale Inventories, Wholesale Trade Sales.

Consumer spending habits changed during the pandemic. Growth in consumer spending was stronger for goods than services because of pandemic restrictions. We anticipate that consumer spending growth will be stronger for services going forward as the impact on the economy from the omicron variant continues to fade.

^{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.}