What I’m Watching This Week – 16 May 2022

The Markets (as of market close May 13, 2022)

Despite a late-week rally, stocks closed last week lower, extending the market’s streak of losses to six consecutive weeks. In what proved to be a very choppy week of trading, each of the benchmark indexes lost value, led by the Nasdaq, which is down over 24.0% so far this year. The large caps of the Dow and the S&P 500 are down 11.4% and 15.6%, respectively, in 2022. On the other hand, 10-year Treasury yields have risen over 140 basis points so far this year. Last week, crude oil prices ended relatively flat, while the dollar advanced marginally. Gold prices slid lower. Investors are still grappling with the economic impact of the Federal Reserve’s response to persistent inflation. In a sign that inflation is still running hot, two major inflation reports, the Producer Price Index and the Consumer Price Index (see below) showed annual increases of 11.0% and 8.3% through April.

Last Monday saw the S&P 500 dip 3.2% to fall below 4,000 for the first time since March 2021. Investors moved away from stocks, uncertain of how aggressive the Federal Reserve will be to slow rising inflation. The Nasdaq fell 4.3% to its lowest level since November 2020. The Russell 2000 dropped 4.2%, and the Dow declined more than 650 points, or 2.0%. Ten-year Treasury yields slipped 4.4 basis points, but remained over 3.00%, closing the day at 3.07%. The dollar was flat. Crude oil prices fell $7.30 to $102.47 per barrel.

Stocks ended last Tuesday slightly higher in a day of choppy trading. The Nasdaq gained 1.0% and the S&P 500 rose 0.3%. The Dow inched up less than 0.1%, the Global Dow gained 0.1%, while the Russell 2000 lost 0.3%. Ten-year Treasury yields fell for the second consecutive day, sliding more than 10 basis points to 2.97%. Crude oil prices also dipped below $100.00, to close the day at around $99.87 per barrel. The dollar increased, while gold prices fell.

Wall Street saw stocks retreat last Wednesday, with each of the benchmark indexes listed here ending the day in the red. A drop in the Consumer Price Index (see below) wasn’t enough to temper investor concerns about rising inflation. Once again, the Nasdaq led the declines, dropping 3.2%, followed by the Russell 2000 (-2.5%), the S&P 500 (-1.7%), the Dow (-1.0%), and the Global Dow (-0.1%). Crude oil prices vaulted higher, jumping nearly $5.50 to reach $105.25 per barrel. The dollar and gold prices advanced, while 10-year Treasury yields fell to 2.92%.

Last Thursday was another day of extreme volatility in the market. Ultimately, the Nasdaq eked out a 0.1% gain, the Russell 2000 rose 1.2%, while the Dow (-0.3%) and the S&P 500 (-0.1%) dipped lower. Ten-year Treasury yields fell 10.4 basis points to 2.81% as bond prices climbed higher. Crude oil prices jumped for the second consecutive day, closing at $106.73 per barrel. The dollar also advanced, while gold prices fell.

In what may prove to be a robust day of dip buying, stocks rebounded last Friday. Each of the benchmark indexes listed here posted solid gains, led by the Nasdaq (3.8%) and the Russell 2000 (3.3%). The S&P 500 advanced 2.4%, the Global Dow rose 1.6%, and the Dow gained 1.5%. As equity values rose, so did bond yields, reversing a rally in bond prices. Ten-year Treasury yields added 11.8 basis points to reach 2.93%. Crude oil prices advanced over $4.00 to hit $110.30 per barrel. The dollar slid lower for the first time all week.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 5/13Weekly ChangeYTD Change
DJIA36,338.3032,899.3732,196.00-2.14%-11.40%
Nasdaq15,644.9712,144.6611,805.00-2.80%-24.54%
S&P 5004,766.184,123.344,023.89-2.41%-15.57%
Russell 20002,245.311,839.561,792.67-2.55%-20.16%
Global Dow4,137.633,805.923,743.16-1.65%-9.53%
Fed. Funds target rate0.00%-0.25%0.75%-1.00%0.75%-1.00%0 bps75 bps
10-year Treasuries1.51%3.12%2.93%-19 bps142 bps
US Dollar-DXY95.64103.67104.560.86%9.33%
Crude Oil-CL=F$75.44$110.56$110.46-0.09%46.42%
Gold-GC=F$1,830.30$1,882.10$1,806.90-4.00%-1.28%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • Inflation decelerated in April, according to the Consumer Price Index. The CPI rose 0.3% last month after advancing 1.2% in March. The year-over-year rate lowered from 8.5% in March to 8.3% in April. However, the CPI, excluding food and energy prices, rose 0.3 percentage point to 0.6% in April. Helping to pull the April CPI lower was a 2.7% drop in energy prices after increasing 11.0% in March. On the other hand, food prices rose 0.9% in April and have increased 9.4% over the last 12 months, the largest year-over-year increase since April 1981. Also, contributing to the April rise in the CPI were increases in prices for shelter, airline fares, new vehicles, medical care, recreation, and household furnishings and operations. Whether the April data is a sign of slowing inflation remains to be seen. It is unlikely to have an immediate impact on the fiscal tightening policy of the Federal Reserve.
  • The Producer Price Index for April rose 0.5% after advancing 1.6% in March. Producer prices have increased 11.0% since April 2021. Energy and food prices increased last month and have risen 40.0% and 16.3%, respectively, over the past 12 months. Also marking a notable increase in April were prices for construction, which climbed 4.0%. Prices less foods, energy, and trade services moved up 0.6% in April after increasing 0.9% in March. For the 12 months ended in April, the index less foods, energy, and trade services rose 6.9%.
  • In a sign that inflationary pressures may have peaked, April import prices were unchanged from a month earlier. Import prices are up 12.0% since April 2021. Fuel import prices declined 2.4% in April following a 17.3% increase the previous month, the first one-month drop since December 2021. Despite the decrease in April, import fuel prices rose 64.3% over the past 12 months. Nonfuel import prices increased 0.4% in April. Higher prices for nonfuel industrial supplies and materials, capital goods, foods, feeds, and beverages, and automotive vehicles all contributed to the April increase in nonfuel import prices. Nonfuel imports rose 7.2% over the past 12 months. Export prices advanced 0.6% last month after climbing 4.1% in March. Agricultural exports advanced 1.1% in April, after increasing 4.3% the previous month. Nonagricultural exports advanced 0.5% in April following an increase of 4.1% in March.
  • The federal budget in April posted a $308.2 billion surplus, compared to a $225.6 billion deficit a year ago. Government receipts totaled $863.6 billion, or $548.4 billion more than March receipts and 97.0% above the total from April of last year. Government expenditures were $555.4 billion, or $47.6 billion more than March outlays. Through the first seven months of the fiscal year, the government budget deficit sits at $360.0 billion, 81.0% lower than the $1,931.8 billion shortfall over the same period last year. Contributing to the increase in government receipts this fiscal year is a 69.0% increase in individual income tax receipts. Also, employment and general retirement tax receipts are up 7.0% and corporate income taxes increased 22.0%.
  • The national average retail price for regular gasoline was $4.328 per gallon on May 9, $0.146 per gallon above the prior week’s price and $1.367 higher than a year ago. Also as of May 9, the East Coast price increased $0.15 to $4.24 per gallon; the Gulf Coast price rose $0.15 to $4.01 per gallon; the Midwest price climbed $0.17 to $4.15 per gallon; the West Coast price increased $0.12 to $5.22 per gallon; and the Rocky Mountain price increased $0.04 to $4.23 per gallon. Residential heating oil prices averaged $3.95 per gallon on May 6, about $0.83 per gallon less than the prior week’s price. U.S. crude oil refinery inputs averaged 15.7 million barrels per day during the week ended May 6, which was 230,000 barrels per day more than the previous week’s average. During the week ended May 6, refineries operated at 90.0% of their operable capacity, and gasoline production increased, averaging 9.7 million barrels per day.
  • For the week ended May 7, there were 203,000 new claims for unemployment insurance, an increase of 1,000 from the previous week’s level, which was revised up by 2,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended April 30 was 1.0%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended April 30 was 1,343,000, a decrease of 44,000 from the previous week’s level, which was revised up by 3,000. This is the lowest level for insured unemployment since January 3, 1970, when it was 1,332,000. States and territories with the highest insured unemployment rates for the week ended April 23 were California (2.1%), New Jersey (2.1%), Alaska (1.9%), Rhode Island (1.8%), New York (1.7%), Puerto Rico (1.6%), Massachusetts (1.5%), Minnesota (1.5%), Pennsylvania (1.4%), Connecticut (1.3%), and Illinois (1.3%). The largest increases in initial claims for the week ended April 30 were in New York (+7,329), Illinois (+3,140), Kentucky (+1,152), Michigan (+1,092), and New Hampshire (+469), while the largest decreases were in Massachusetts (-3,029), California (-2,816), New Jersey (-2,466), Connecticut (-2,319), and Ohio (-2,018).

Eye on the Week Ahead

The April figures for existing home sales are out this week. The housing sector has slowed from last year’s torrid pace. Sales of existing homes have declined in both February and March. An indicator of consumer spending, the retail sales report for April is available this week. March saw retail sales advance 0.5%, bringing the year-over-year increase to 5.5%. Also out this week is the Federal Reserve’s monthly index of industrial production for April. Industrial production advanced 0.9% in March and is up 5.5% from March 2021.

What I’m Watching This Week – 9 May 2022

The Markets (as of market close May 6, 2022)

Stocks ended last week lower, marking the fifth consecutive week of losses. Despite suggestions from Federal Reserve Chair Jerome Powell that the central bank is not likely to raise interest rates by 75 basis points, stubbornly high inflation has set the Fed on a path of quantitative tightening and interest-rate advances that presents a risk to economic growth. April’s solid jobs numbers (see below) suggest employers may be inclined to keep raising wages in order to attract workers, adding to inflationary pressures. Once again, tech shares took the brunt of the sell off, with only energy shares and utility stocks posting gains. The Nasdaq and the Russell 2000 each fell more than 1.2% last week, while the S&P 500 extended its losing streak after slipping 0.2%. Treasury bond prices continued to drop, pushing yields higher. Crude oil prices advanced again last week on supply concerns fueled by the impending European Union sanctions on Russian oil.

Stocks began last week on an uptick, likely influenced by dip buyers. Each of the benchmark indexes listed here gained ground, led by the Nasdaq, which rose 1.6% on the heels of a rally by several major tech companies. The Russell 2000 added 1.0%, the S&P 500 gained 0.6%, and the Dow climbed 3.0%. The Global Dow slid 0.5%. Ten-year Treasury yields traded near 3.0%, ending the day at 2.99%. The dollar rose $0.67 to reach $103.63 against a basket of foreign currencies. Crude oil prices increased $1.13 to $105.82 per barrel.

For the second session in a row, stocks ended the day higher last Tuesday as investors awaited Wednesday’s expected Federal Reserve rate hike. The Russell 2000 (1.0%) and the S&P 500 (0.5%) led the indexes, followed by the Global Dow (0.8%). The Nasdaq and the Dow each gained 0.2%. Crude oil prices, 10-year Treasury yields, and the dollar declined. Gold prices advanced.

Wall Street rallied last Wednesday after Jerome Powell eased concerns that the central bank would pursue a more aggressive pace of tightening. Nevertheless, earlier in the day, the Federal Open Market Committee announced the steepest interest-rate hike in 20 years. Each of the benchmark indexes listed here posted notable gains, with both the Nasdaq and the S&P 500 adding 3.0%. The Dow jumped 2.8% and the Russell 2000 advanced 2.7%. The Global Dow rose 1.8%. Ten-year Treasury yields slid 4.3 basis points to 2.91%. The dollar dropped nearly 1.0%, while crude oil prices soared, adding $5.50 to reach $107.90 per barrel after the European Union proposed an import ban on Russian oil.

The Wall Street rally from last Wednesday reversed to a retreat last Thursday as stocks plunged by the end of trading. The Nasdaq fell 5.0%, the Russell 2000 dropped 4.3%, the S&P 500 slid 3.6%, and the Dow declined 3.1%. The Global Dow gave back 1.8%. Ten-year Treasury yields added nearly 15 basis points to close at 3.06%, the highest rate since 2018. The dollar rose to $103.50. Crude oil prices jumped to $108.25 per barrel.

Stocks fell again last Friday to end a roller-coaster week. The small caps of the Russell 2000 (-1.7%) and the tech-heavy Nasdaq (-1.4%) led the declining indexes, followed by the S&P 500 (-0.6%), the Global Dow (-0.4%), and the Dow (-0.3%). Ten-year Treasury yields gained 5.7 basis points to end the week at 3.12%. Crude oil prices topped $110.00 per barrel after climbing $2.23. The dollar was little changed, while gold prices advanced $6.10 to $1,881.80 per ounce.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 5/6Weekly ChangeYTD Change
DJIA36,338.3032,977.2132,899.37-0.24%-9.46%
Nasdaq15,644.9712,334.6412,144.66-1.54%-22.37%
S&P 5004,766.184,131.934,123.34-0.21%-13.49%
Russell 20002,245.311,862.161,839.56-1.21%-18.07%
Global Dow4,137.633,815.073,805.92-0.24%-8.02%
Fed. Funds target rate0.00%-0.25%0.25%-0.50%0.75%-1.00%50 bps75 bps
10-year Treasuries1.51%2.88%3.12%24 bps161 bps
US Dollar-DXY95.64103.17103.670.48%8.40%
Crude Oil-CL=F$75.44$104.07$110.566.24%46.55%
Gold-GC=F$1,830.30$1,897.90$1,882.10-0.83%2.83%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • As expected, the Federal Open Market Committee increased the target range for the federal funds rate by 50 basis points to 0.75%-1.00%. The Committee anticipates that ongoing increases in the target range will be appropriate. In addition, the FOMC decided to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities on June 1. In support of its decision, the Committee noted that, despite strength in household spending and employment, overall economic activity edged down in the first quarter, while inflation remained elevated. This led to supply-and-demand imbalances related to the pandemic, higher energy prices, and broader price pressures. The FOMC also said the implications on the U.S. economy resulting from the invasion of Ukraine by Russia are highly uncertain. However, the invasion and related events are creating additional upward pressure on inflation and are likely to weigh on economic activity. In addition, COVID-related lockdowns in China are likely to exacerbate supply-chain disruptions. The Committee made it a point to state that it is “highly attentive” to inflation risks.
  • The employment sector continued to show strength in April, with 428,000 new jobs added. Job gains were widespread, with the largest increases occurring in leisure and hospitality, in manufacturing, and transportation and warehousing. Total employment is nearing its February 2020 pre-pandemic level but remains down by 1.2 million, or 0.8%. In April, the unemployment rate, at 3.6%, was unchanged from the previous month, and the total number of unemployed persons edged down to 5.9 million. In another sign of the employment sector’s recovery from the pandemic, both the unemployment rate and the total number of unemployed are near their February 2020 levels (3.5% and 5.7 million, respectively). In April, both the labor force participation rate, at 62.2%, and the employment-population ratio, at 60.0%, were little changed over the previous month. In April, 7.7% of employed persons teleworked because of the coronavirus pandemic, down from 10.0% in March. In April, 1.7 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic, which is down 2.5 million from the previous month. Average hourly earnings rose by $0.10, or 0.3%, to $31.85 in April. Over the past 12 months, average hourly earnings have increased by 5.5%. The average work week was unchanged at 34.6 hours in April.
  • Manufacturing improved in April, according to the latest S&P Global US Manufacturing PMI™. The S&P Global US Manufacturing Purchasing Managers’ Index™ posted 59.2 in April, up from 58.8 in March. The rate of growth accelerated for the third consecutive month and was the sharpest since last September. Contributing to the uptick in manufacturing was a faster rise in output during April as new orders increased. Although manufacturing expanded in April, severe material and capacity shortages at suppliers led to sharper increases in cost burdens and selling prices.
  • The S&P Global US Services PMI Business Activity Index registered 55.6 in April, down from 58.0 in March. The April reading marked an uptick in business activity in the services sector, but at a slower pace than in the previous month. At the same time, cost burdens rose substantially in April. Higher wage, transportation, and material costs drove up input prices. Service providers mentioned greater food, energy and fuel costs in particular. The rate of input price inflation accelerated for the third successive month to the fastest in more than 11 years. Service firms attempted to pass on the price increases to customers, which weighed on customer spending.
  • According to the latest Job Openings and Labor Turnover report, at the end of March there were 11.5 million job openings, the highest level in the history of the series, which began in December 2000. Job openings increased in retail trade (+155,000) and in durable goods manufacturing (+50,000). Job openings decreased in transportation, warehousing, and utilities (-69,000); state and local government education (-43,000); and federal government (-20,000). Also in March, there were 6.7 million hires. On the other side of the ledger, 6.3 million people were separated from their jobs, including 4.5 million quits and 1.4 million layoffs and discharges, along with 380,000 other separations. Over the 12 months ended in March, hires totaled 77.7 million and separations totaled 71.4 million, yielding a net employment gain of 6.3 million.
  • The goods and services trade deficit was $109.8 billion in March, up $20.0 billion, or 22.3%, from the February deficit. Exports increased 5.6% while imports vaulted 10.3% in March. Year to date, the goods and services deficit increased $84.8 billion, or 41.5%, from the same period in 2021. Exports increased $104.5 billion, or 17.7%. Imports increased $189.3 billion, or 23.8%. Of particular note, the trade in goods deficit with China increased $7.4 billion in March; the goods deficit with Canada rose $3.7 billion; while the goods deficit with the European Union decreased $1.3 billion.
  • The national average retail price for regular gasoline was $4.182 per gallon on May 2, $0.075 per gallon above the prior week’s price and $1.292 higher than a year ago. Also as of April 25, the East Coast price increased $0.11 to $4.09 per gallon; the Gulf Coast price rose $0.07 to $3.86 per gallon; the Midwest price climbed $0.07 to $3.99 per gallon; the West Coast price increased $0.02 to $5.10 per gallon; and the Rocky Mountain price was unchanged at $4.19 per gallon. Residential heating oil prices averaged $4.78 per gallon on April 29, about $0.84 per gallon more than the prior week’s price. U.S. crude oil refinery inputs averaged 15.5 million barrels per day during the week ended April 29, which was 218,000 barrels per day less than the previous week’s average. During the week ended April 29, refineries operated at 88.4% of their operable capacity, and gasoline production increased, averaging 9.7 million barrels per day.
  • For the week ended April 30, there were 200,000 new claims for unemployment insurance, an increase of 19,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended April 23 was 1.0%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended April 23 was 1,384,000, a decrease of 19,000 from the previous week’s level, which was revised down by 5,000. This is the lowest level for insured unemployment since February 17, 1970, when it was 1,371,000. States and territories with the highest insured unemployment rates for the week ended April 16 were California (2.1%), New Jersey (2.1%), Alaska (1.9%), Minnesota (1.6%), New York (1.6%), Illinois (1.5%), Puerto Rico (1.5%), Connecticut (1.4%), Massachusetts (1.4%), Michigan (1.4%), and Rhode Island (1.4%). The largest increases in initial claims for the week ended April 23 were in New York (+4,760), Massachusetts (+3,491), Connecticut (+1,045), Georgia (+932), and New Jersey (+888), while the largest decreases were in California (-2,860), Ohio (-2,609), Michigan (-1,887), Washington (-475), and Minnesota (-453).

Eye on the Week Ahead

Inflation data for April is available this week, including the Consumer Price Index. Consumer prices advanced 1.2% in March and were up 6.5% since March 2021. The Producer Price Index is also available this week. March showed that prices at the producer level rose 1.4% and are up a notable 11.2% for the 12 months ended in March. Another indicator of inflationary trends is the report on import and export prices. Import prices climbed 2.6% in March, while export prices rose 4.5%. Since March 2021, import prices have risen 12.5%, and export prices have climbed 18.8%.

Monthly Market Review – April 2022

The Markets (as of market close April 29, 2022)

April saw rising COVID cases in China prompt the shutdown of some of its biggest cities, causing global supply-chain issues. The ongoing war in Ukraine continues to exacerbate pressure on food and energy prices. While first-quarter earnings data was moderately favorable overall, several major companies reported disappointing results. And inflation continued to rise, leading to an almost certain 50-basis point interest rate increase from the Federal Reserve this week.

All of this led to April being a rather difficult month for Wall Street, capping the worst four-month start to a year in decades. The Dow and the S&P 500 endured the worst monthly returns since March 2020, but they weren’t as bad as the Nasdaq, which suffered its biggest drop since October 2008, according to Dow Jones Market Data.

Ten-year Treasury yields climbed 56 basis points to settle at 2.88%. Crude oil prices advanced $3.13 to $104.07 per barrel. Prices at the pump fell in April as the national average retail price for regular gasoline was $4.107 per gallon on April 25, up from the March 28 price of $4.334 per gallon. Gold prices decreased after climbing well above $1,900.00 per ounce in March. The U.S. dollar hit a 20-year high before pulling back but still posted the best month since January 2015.

Stock Market Indexes

Market/Index2021 ClosePrior MonthAs of April 29Monthly ChangeYTD Change
DJIA36,338.3034,678.3532,977.21-4.91%-9.25%
Nasdaq15,644.9714,220.5212,334.64-13.26%-21.16%
S&P 5004,766.184,530.414,131.93-8.80%-13.31%
Russell 20002,245.312,070.131,862.16-10.05%-17.06%
Global Dow4,137.634,098.733,815.07-6.92%-7.80%
Fed. Funds target rate0.00%-0.25%0.25%-0.50%0.25%-0.50%0 bps25 bps
10-year Treasuries1.51%2.32%2.88%56 bps137 bps
US Dollar-DXY95.6498.35103.174.90%7.87%
Crude Oil-CL=F$75.44$100.94$104.073.10%37.95%
Gold-GC=F$1,830.30$1,941.50$1,897.90-2.25%3.69%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark the performance of specific investments.

Latest Economic Reports

  • Employment: Employment rose by 431,000 in March after 750,000 new jobs were added in February. Notable job gains occurred in leisure and hospitality, professional and business services, retail trade, and manufacturing. The unemployment rate inched down by 0.2 percentage point to 3.6%. The number of unemployed persons decreased 318,000 in March to 6.0 million. These measures are little different from their pre-pandemic values in February 2020 (3.5% and 5.7 million, respectively). Among the unemployed, the number of workers who permanently lost their jobs declined by 191,000 to 1.4 million in March. Also in March, the number of persons who were unable to work because their employer closed or lost business due to the pandemic fell to 2.5 million — down from 4.2 million in the previous month. The labor-force participation rate increased 0.1 percentage point to 62.4% in March. The employment-population ratio increased by 0.2 percentage point to 60.1%. In March, average hourly earnings rose by $0.13 to $31.73. Over the last 12 months, average hourly earnings rose by 5.6%. The average work week fell by 0.1 hour to 34.6 hours in March.
  • There were 180,000 initial claims for unemployment insurance for the week ended April 23. Over the first four months of 2022, initial weekly claims and total claims for unemployment insurance benefits steadily decreased. As of April 16, there were 1,408,000 total claims for unemployment benefits. This is the lowest level for insured unemployment since February 7, 1970, when it was 1,397,000. A year ago, there were 3,776,000 total claims for unemployment insurance benefits.
  • FOMC/interest rates: The Federal Open Market Committee did not meet in April. However, with inflation sitting above 6.0% for the sixth consecutive month and continuously increasing since December 2020, pressure will be on the Federal Reserve to increase interest rates by at least 50 basis points following its meeting in May. The FOMC increased the federal funds target rate range by 25 basis points to 0.25%-0.50% after its March meeting, the first such increase since December 2018.
  • GDP/budget: Gross domestic product fell 1.4% in the first quarter of 2022 compared with a 6.9% advance in the fourth quarter of 2021. While data for this advance estimate of GDP is based on incomplete information, the decrease in GDP primarily reflected decreases in private inventory investment, exports, federal government spending, and state and local government spending, while imports, which are a subtraction in the calculation of GDP, increased. Consumer spending, as measured by personal consumption expenditures, was 2.7% in the first quarter (2.5% in the previous quarter). Spending on goods rose 4.1%, while spending on services climbed 4.3%. The PCE price index, a measure of inflation, increased 7.0% in the first quarter after advancing 6.4% in the fourth quarter. Gross private domestic investment, which includes nonresidential and residential fixed investment, vaulted 2.3% in the first quarter after gaining 36.7% in the previous quarter. Nonresidential (business) fixed investment increased 9.2% (2.9% in the fourth quarter), while residential fixed investment increased 2.1% (2.2% in the fourth quarter). Net exports declined 5.9% in the first quarter, with goods exports dropping 9.6% while services rose 3.8%. Imports climbed 17.7% following a 17.9% rise in the fourth quarter.
  • The Treasury budget deficit came in at $192.7 billion in March, 12.4% less than the February deficit of $216.6 billion and 71.0% under the March 2021 deficit of $659.6 billion. Through the first six months of fiscal year 2022, the deficit sits at $668.3 billion, 155.0% lower than the deficit over the same period in fiscal year 2021 ($1.71 trillion). So far in this fiscal year, individual income tax receipts have risen 36.0% and corporate income tax receipts have increased 22.0%. Compared to March 2021, government expenditures are down 45.0%, while receipts are up 18.0%.
  • Inflation/consumer spending: According to the latest Personal Income and Outlays report for March, personal income and disposable personal income rose 0.5% after each increased 0.7% in February. Consumer spending increased 1.1% following a 0.6% jump in February. Consumer prices climbed 0.9% in March after advancing 0.5% the previous month. Consumer prices have risen 6.6% since March 2021. Year over year, energy prices vaulted 33.9%, while food prices increased 9.2%.
  • The Consumer Price Index increased 1.2% in March after climbing 0.8% in the previous month. Increases in the indexes for gasoline, shelter, and food were the largest contributors to the CPI increase. The gasoline index rose 18.3% in March and accounted for over half of the overall March increase. Since March 2021, the CPI has risen 8.5% — the largest increase since the 12-month period ended December 1981.
  • Prices that producers receive for goods and services jumped 1.4% in March following a 0.9% increase in February. Producer prices have increased 11.2% since March 2021. Prices less foods, energy, and trade services increased 0.9% in March, the largest increase since rising 1.0% in January 2021. For the year, prices less foods, energy, and trade services moved up 7.0%. In March, prices for goods jumped 2.3%, while prices for services rose 0.9%. A major factor in the March increase in goods prices was a 5.7% increase in energy prices.
  • Housing: Sales of existing homes declined for the second consecutive month, falling 2.7% in March after dropping 7.2% in February. Year over year, existing home sales were 4.5% under the March 2021 estimate. According to the latest survey from the National Association of Realtors®, home shoppers are feeling the effects of rising mortgage rates and higher inflation. The median existing-home price was $375,300 in March, up from $357,300 in February and 15.0% more than March 2021 ($326,300). Unsold inventory of existing homes represents a 2.0-month supply at the current sales pace. Sales of existing single-family homes also fell in March, down 2.7% after dropping 7.0% in February. Since March 2021, sales of existing single-family homes have fallen 3.8%. The median existing single-family home price was $382,000 in March, up from $363,800 in February.
  • Sales of new single-family homes fell 8.6% in March after decreasing 2.2% (revised) in February. The median sales price of new single-family houses sold in March was $436,700 ($421,600 in February). The March average sales price was $523,900 ($508,100 in February). The inventory of new single-family homes for sale in March represented a supply of 5.7 months at the current sales pace, up from February’s 5.3-month supply. Sales of new single-family homes in March were 12.6% below the March 2021 estimate.
  • Manufacturing: Industrial production increased 0.9% in March, the same increase as in February. All three major industry groups advanced in March. Manufacturing rose 0.9%, mining increased 1.7%, and utilities climbed 0.4%. Total industrial production in March was 5.5% higher than it was a year earlier. Since February 2021, manufacturing has risen 4.9%, mining has jumped 7.0%, while utilities increased 7.5%.
  • March saw new orders for durable goods increase 0.8% following a 1.7% February decrease. Excluding transportation, new orders rose 1.1% in March. Excluding defense, new orders increased 1.2%. While the March advance was widespread, areas of particular note include computers and electronic products (2.6%), electrical equipment, appliances, and components (3.9%), and motor vehicles and parts (5.0%). New orders for nondefense capital goods decreased 0.5% in March, while new orders for defense capital goods slid 5.6% lower. Since March 2021, new orders for durable goods have increased 12.6%.
  • Imports and exports: Import prices rose 2.6% in March after advancing 1.6% in February, according to the U.S. Bureau of Labor Statistics. The March increase in import prices was the largest monthly rise since April 2011. Import prices have advanced 12.5% since March 2021. Higher fuel prices drove the increases in both months. Contributing to the March increase in import prices was a 14.6% jump in fuel prices after increasing 10.0% the previous month. Prices for nonfuel imports rose 1.2% in March. For the 12 months ended in March, prices for fuel have increased 66.7%. Prices for U.S. exports advanced 4.5% in March following a 3.0% rise the previous month. The March advance in export prices was the largest since January 1989. Higher prices for both agricultural and nonagricultural exports in March contributed to the overall increase in U.S. export prices. Export prices have risen 18.8% since March 2021 — the largest over-the-year increase since 12-month percent changes were first published in September 1984.
  • The international trade in goods deficit was $125.3 billion in March, up $19.0 billion, or 17.8%, from February. Exports of goods were $169.3 billion in March, $11.4 billion more than in February. Imports of goods were $294.6 billion, $30.3 billion more than February imports. The 11.5% increase in imports was spread among most major categories, particularly industrial supplies (15.0%), consumer goods (13.6%), autos (12.0%), capital goods (7.6%), and food, feeds, and beverages (6.2%). While gains in exports were smaller (7.2%), they were also widespread, with notable increases in industrial supplies (12.3%), autos, (8.4%), consumer goods (3.1%), and capital goods (1.7%).
  • The latest information on international trade in goods and services, released April 5, is for February and shows that the goods and services trade deficit decreased $0.1 billion, or 0.1%, to $89.2 billion. February exports were $228.6 billion, 1.8% above the January estimate. February imports were $317.8 billion, 1.3% more than January imports. Year over year, the goods and services deficit increased $45.7 billion, or 34.5%, from the same period in 2021. Exports increased 17.6%. Imports increased 22.0%.
  • International markets: The European Union saw a modest uptick in its first-quarter gross domestic product. However, the economy could be facing a significant slowdown as Russia’s war with Ukraine has kept energy costs high and reduced household spending power. The World Bank forecasts that the Russia-Ukraine war could drive energy prices up by more than 50.0% from last year, and food prices are projected to rise nearly 23.0%. Also, citing the war’s impact on energy and food prices, the International Monetary Fund last week offered sizable cuts in its forecasts for economic growth for 2022 and 2023. The IMF projects global growth will slow to 3.6% in 2022 (6.1% in 2021), with an additional 0.2 percentage point drop in 2023. A spike in COVID cases in China prompted Beijing to institute lockdowns, which impacted global economies still trying to recover from the pandemic. Overall, for the markets in April, the STOXX Europe 600 Index dipped 1.8%. The United Kingdom’s FTSE was flat. Japan’s Nikkei 225 Index declined 3.5%, while China’s Shanghai Composite Index dropped 7.2%.
  • Consumer confidence: The Conference Board Consumer Confidence Index® decreased slightly in April following an increase in March. The index stands at 107.3 in April, down from 107.6 in March. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, decreased to 152.6 in April, down from 153.8 in March. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, inched higher to 77.2 in April from 76.7 in March.

Eye on the Month Ahead

The Federal Open Market Committee meets in May for the first time since March. It is expected that the Committee will follow its most recent 25-basis point rate increase with a rate hike of at least 50 basis points. Many analysts expect the economy and stock market to be impacted by the ongoing Russia-Ukraine conflict and the restrictive monetary policy adopted by the Federal Reserve as it attempts to slow rising inflation.

What I’m Watching This Week – 2 May 2022

The Markets (as of market close April 29, 2022)

The markets seemed to react with fear last week. The major indexes fell, with about 90% of S&P 500 stocks losing ground and every major market sector closing in the red. Investors turned to bonds, sending the price of 10-year Treasury notes up and the yield down. Wall Street is also preparing for what is expected to be the first 50-basis point increase in the federal funds rate since 2000, following the meeting of the Federal Open Market Committee this Tuesday and Wednesday. The Nasdaq (-3.9%) and the Russell 2000 (-4.1%) led the drop in the indexes, followed by the S&P 500 (-3.3%), the Global Dow (-3.0%), and the Dow (-2.5%). Crude oil prices added more than $3.00 to climb past $104.00 per barrel. The dollar advanced, while gold prices slid.

Last Monday, tech stocks posted solid gains, helping to drive the major benchmark indexes higher. Conversely, stocks that move with the economy slid lower as a rise in COVID-19 cases in China raised concerns about a global economic slowdown. Energy, materials, real estate, and utilities were sectors that performed poorly, while communication services, consumer discretionary, and information technology moved higher. Among the market indexes, the Nasdaq (1.3%) led the advance, followed by the Dow (0.7%), the Russell 2000 (0.7%), and the S&P 500 (0.6%). The Global Dow fell 1.3%. Ten-year Treasury yields dipped 8 basis points to close at 2.82%. The dollar continued to rise, increasing $0.52 to $101.74. Crude oil prices dropped $3.34 to $98.73 per barrel.

Stocks fell last Tuesday, unable to maintain the previous day’s momentum. Disappointing first-quarter earnings data from some major companies, coupled with more shutdowns in China in response to the increasing spread of the coronavirus, helped drive stocks to a six-week low. The Nasdaq (-4.0%) and the Russell 2000 (-3.3%) dropped the furthest, followed by the S&P 500 (-2.8%), the Dow (-2.4%), and the Global Dow (-1.6%). Bond prices continued to climb, pulling yields lower, with 10-year Treasury yields slipping 5.4 basis points to 2.77%. The dollar, crude oil, and gold prices advanced.

Equities closed last Wednesday with mixed results following a choppy day of trading. The Dow and the S&P 500 edged up 0.2%, while the Russell 2000 and the Global Dow fell 0.3%. The Nasdaq ended the day flat. Ten-year Treasury yields ended a streak of declines after rising 4.6 basis points to close at 2.81%. Crude oil prices climbed to $102.24 per barrel as the European Union’s ban on Russian crude gained support from Germany. The dollar rose higher for the sixth straight session.

Wall Street continued to be marked by volatility as stocks shot higher last Thursday. Favorable first-quarter earnings reports from several large companies provided the impetus behind the market’s best rally in seven weeks. The Nasdaq jumped 3.1% and the S&P 500 added 2.5% to lead the benchmark indexes listed here. The Dow (1.9%), the Russell 2000 (1.8%), and the Global Dow (1.3%) also edged higher. Bond prices slid, pushing yields higher, with 10-year Treasuries gaining 4.5 basis points to 2.86%. Crude oil prices also advanced, gaining $3.31 to reach $105.33 per barrel. The dollar rose again, as did gold prices. Stocks closed last Friday in the red, with each of the benchmark indexes listed here losing value. Disappointing first-quarter earnings reports from some major tech companies drove tech shares lower, causing the S&P 500 (-3.6%) and the Nasdaq (-4.2%) to tumble. The Dow lost nearly 900 points, ultimately giving back 2.8% by the close of trading last Friday. The Russell 2000 fell about 3.0% and the Global Dow slipped 1.0%. Ten-year Treasury yields rose 2.4 basis points to 2.88%. Crude oil prices declined $1.30 to $104.07 per barrel. The dollar dipped for the first time in several sessions.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 4/29Weekly ChangeYTD Change
DJIA36,338.3033,811.4032,977.21-2.47%-9.25%
Nasdaq15,644.9712,839.2912,334.64-3.93%-21.16%
S&P 5004,766.184,271.784,131.93-3.27%-13.31%
Russell 20002,245.311,940.661,862.16-4.05%-17.06%
Global Dow4,137.633,933.143,815.07-3.00%-7.80%
Fed. Funds target rate0.00%-0.25%0.25%-0.50%0.25%-0.50%0 bps25 bps
10-year Treasuries1.51%2.90%2.88%-2 bps137 bps
US Dollar-DXY95.64101.11103.172.04%7.87%
Crude Oil-CL=F$75.44$101.22$104.072.82%37.95%
Gold-GC=F$1,830.30$1,934.40$1,897.90-1.89%3.69%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • Not unexpectedly, the initial, or advance, estimate of the first quarter gross domestic product for 2022 slid 1.4% after increasing 6.9% in the fourth quarter of 2021. While this data is somewhat incomplete and based on assumptions, as these numbers will probably change when more complete data becomes available over the next two months. Also, much of the decline in GDP is likely due more to geopolitical events (e.g., the Ukraine war, China COVID lockdown) and not necessarily attributable to significant weakness in the U.S. economy. A primary cause in the decrease in GDP can be traced to an expansion of net exports. Goods exports fell 9.6%, while exports of services rose 3.8%. On the other hand, imports of goods rose 20.5%, and services advanced 4.1%. There were also negative contributions from private inventories and government expenditures. However, an important economic indicator, personal consumption expenditures, increased 2.7% (2.5% in the fourth quarter). Also of note, the personal consumption expenditures price index, a measure of inflation, increased 7.0% compared with an increase of 6.4% in the previous quarter.
  • Overall, income and prices climbed higher in March, further evidence of rising inflationary pressures. According to the latest data from the Bureau of Economic Analysis, both personal income and disposable personal income increased 0.5% in March. The personal consumption price index, a measure of inflation valued by the Federal Reserve, increased 0.9% in March and 6.6% from one year ago. Energy prices climbed 33.9%, while food prices advanced 9.2%. Excluding food and energy, prices have increased 5.2% since March 2021. Consumer spending climbed 1.1% in March. Wages and salaries advanced 0.6% in March, while payouts for unemployment insurance benefits fell 7.2% as the job market recovers from pandemic-related layoffs. Consumers spent more on nondurable goods such as food and energy and services. Expenditures on durable goods fell 1.0%.
  • New orders for durable goods rose 0.8% in March, rebounding from a 1.7% decrease in February. Excluding transportation, new orders increased 1.1%. Excluding defense, new orders increased 1.2%. Computers and electronic products, up for two of the last three months, led the increase, climbing 2.6%. New orders for nondefense capital goods decreased 0.5% in March, and new orders for defense capital goods fell 5.6%. Over the 12 months ended in March, new orders for durable goods have advanced 12.6%.
  • Sales of new single-family homes fell 8.6% in March and are 12.6% below the March 2021 estimate. The median sales price of new houses sold in March 2022 was $436,700. The average sales price was $523,900. In March, inventory of new single-family homes for sale represented a supply of 6.4 months at the current sales rate.
  • The advance report on the international trade in goods deficit, released April 27, shows that the trade deficit for March rose $19.0 billion, or 17.8%, to $125.3 billion. Exports increased $11.4 billion, or 7.2%, in March. Imports rose $30.3 billion, or 11.5%, in March. Since March 2021, the trade in goods balance has increased 37.3%.
  • The national average retail price for regular gasoline was $4.107 per gallon on April 25, $0.041 per gallon above the prior week’s price and $1.235 higher than a year ago. Also as of April 25, the East Coast price increased $0.06 to $3.98 per gallon; the Gulf Coast price rose $0.06 to $3.79 per gallon; the Midwest price climbed $0.04 to $3.92 per gallon; the West Coast price decreased $0.01 to $5.08 per gallon; and the Rocky Mountain price edged up $0.04 to $4.19 per gallon. Residential heating oil prices averaged $3.94 per gallon on April 22, about $0.08 per gallon more than the prior week’s price. U.S. crude oil refinery inputs averaged 15.7 million barrels per day during the week ended April 22, which was 33,000 barrels per day less than the previous week’s average. During the week ended April 22, refineries operated at 90.3% of their operable capacity, and gasoline production decreased, averaging 9.5 million barrels per day.
  • For the week ended April 23, there were 180,000 new claims for unemployment insurance, a decrease of 5,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended April 16 was 1.0%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended April 16 was 1,408,000, a decrease of 1,000 from the previous week’s level. This is the lowest level for insured unemployment since February 7, 1970, when it was 1,397,000. States and territories with the highest insured unemployment rates for the week ended April 9 were California (2.2%), New Jersey (2.2%), Alaska (1.9%), Minnesota (1.8%), New York (1.6%), Rhode Island (1.6%), Illinois (1.5%), Massachusetts (1.5%), Pennsylvania (1.3%), and Puerto Rico (1.3%). The largest increases in initial claims for the week ended April 16 were in Connecticut (+1,391), New Jersey (+1,116), Rhode Island (+368), Montana (+340), and Maryland (+147), while the largest decreases were in Missouri (-7,498), Michigan (-3,509), New York (-2,956), Ohio (-2,902), and Texas (-2,330).

Eye on the Week Ahead

The Federal Open Market Committee meets this week, the results of which are almost certainly to include at least a 50-basis point interest-rate hike. The April employment figures are also available this week. There were 431,000 new jobs added in March. Average hourly earnings have risen 5.6% since March 2021.

What I’m Watching This Week – 25 April 2022

The Markets (as of market close April 22, 2022)

Wall Street closed lower last week as investors weighed mixed earnings data against increased certainty of aggressive interest rate hikes by the Federal Reserve. It was the third straight week of losses for the S&P 500 and the Nasdaq, while the Dow declined for the fourth consecutive week. The hawkish stance taken by the Fed has equities, particularly tech and growth shares, retreating. The small caps of the Russell 2000 fell the furthest last week, followed by the Nasdaq, the Global Dow, the S&P 500, and the Dow. Among the market sectors, only real estate and consumer staples posted weekly gains. Ten-year Treasury yields rose by 8 basis points as bond prices slid lower. Crude oil and gold prices declined, while the dollar advanced.

Stocks edged lower while bond yields rose to begin the week last Monday. The small caps of the Russell 2000 slid 0.7%, pulled lower by underperforming health care and industrials sectors. The remaining benchmark indexes listed here closed the day relatively flat, as the Dow, the Nasdaq, and the S&P 500 wavered between small gains and losses throughout the day. Ten-year Treasury yields rose 3.4 basis points to 2.86%. Crude oil prices added nearly $1.00 to reach $107.89 per barrel. The dollar and gold prices also advanced.

Wall Street rallied last Tuesday, buoyed by strong, first-quarter earnings data from several companies. Of the 48 companies in the S&P 500 that reported first-quarter earnings, 79% posted strong returns. The Nasdaq and the Russell 2000 each gained about 2.0%, followed by the S&P 500 (1.6%), the Dow (1.5%), and the Global Dow (0.4%). Crude oil prices waned on demand concerns, dropping nearly $6.00 to $102.5 per barrel. Bond prices continued to slide, pushing the yield on 10-year Treasuries up 5.1 basis points to 2.91%. The dollar edged higher, while gold prices dipped nearly $37.00 to $1,949.40 per ounce.

Equities ended last Wednesday mixed, with the Dow (0.7%), the Global Dow (0.6%), and the Russell 2000 (0.4%) advancing, while the Nasdaq (-1.2%) and the S&P 500 (-0.1%) lost value. First-quarter earnings data continued to be generally upbeat. Prices on 10-year Treasuries advanced, pulling yields down 7.3 basis points to 2.84%. Crude oil prices were flat, while the dollar and gold prices slid.

Despite an early-day surge on the heels of positive earnings data, stocks closed last Thursday lower after Federal Reserve Chair Jerome Powell said a 50-basis point rate hike is “on the table” when the central bank meets on May 3-4. The Russell 2000 dropped 2.3%, followed by the Nasdaq (-2.1%), the S&P 500 (-1.5%), the Dow (-1.1%), and the Global Dow (-0.8%). Crude oil prices climbed to $103.97 per barrel. The dollar inched higher, while gold prices slid. The yield on 10-year Treasuries rose 7.7 basis points to 2.91%.

Stocks closed last Friday lower to end a week that saw the market seesaw. Each of the benchmark indexes listed here fell more than 2.25%, with the Dow and the S&P 500 declining 2.8%, followed by the Russell 2000 and the Nasdaq, which slid 2.6%. Ten-year Treasury yields dipped slightly to end the day at 2.90%. Crude oil prices declined $2.14 to $101.65 per barrel. The dollar inched higher, while gold prices waned.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 4/22Weekly ChangeYTD Change
DJIA36,338.3034,451.2333,811.40-1.86%-6.95%
Nasdaq15,644.9713,351.0812,839.29-2.63%-17.93%
S&P 5004,766.184,392.594,271.78-2.13%-10.37%
Russell 20002,245.312,004.981,940.66-3.21%-13.57%
Global Dow4,137.634,035.833,933.14-2.54%-4.94%
Fed. Funds target rate0.00%-0.25%0.25%-0.50%0.25%-0.50%0 bps25 bps
10-year Treasuries1.51%2.82%2.90%8 bps139 bps
US Dollar-DXY95.64100.31101.110.80%5.72%
Crude Oil-CL=F$75.44$106.24$101.22-4.73%34.17%
Gold-GC=F$1,830.30$1,975.50$1,934.40-2.08%5.69%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • March saw the number of building permits for residential construction increase by 0.4%. However, single-family permits slid 4.8%. The number of privately owned housing starts rose 0.3% in March, driven higher by a 7.5% increase in multi-unit starts, which was offset by a 1.7% dip in single-family housing starts. Overall housing completions dipped 4.5% last month, and single-family housing completions dropped 6.4%.
  • Existing home sales fell 2.7% in March, declining for the second straight month. Sales of existing homes are down 4.5% since March 2021. Total housing inventory at the end of March increased 11.8% from February but fell 9.5% from one year ago. Unsold inventory sits at a 2.0-month supply at the present sales pace, up from 1.7 months in February and down from 2.1 months in March 2021. The median existing-home price for all housing types in March was $375,300, up from $357,300 in February and ahead of the March 2021 price of $326,300. Sales of existing single-family homes also fell in March, down 2.7% from the February estimate and off 3.8% from March 2021. The median existing single-family home price in March was $382,000, an increase over the February median existing single-family home price of $363,800.
  • The national average retail price for regular gasoline was $4.066 per gallon on April 18, $0.025 per gallon less than the prior week’s price but $1.211 higher than a year ago. Also as of April 18, the East Coast price decreased $0.04 to $3.93 per gallon; the Gulf Coast price was flat at $3.73 per gallon; the Midwest price slid $0.02 to $3.88 per gallon; the West Coast price decreased $0.04 to $5.10 per gallon; and the Rocky Mountain price edged up $0.01 to $4.15 per gallon. Residential heating oil prices averaged $3.86 per gallon, about $0.54 per gallon more than the prior week’s price. U.S. crude oil refinery inputs averaged 15.7 million barrels per day during the week ended April 15, which was 194,000 barrels per day more than the previous week’s average. During the week ended April 15, refineries operated at 91.0% of their operable capacity, and gasoline production increased, averaging 9.8 million barrels per day.
  • For the week ended April 16, there were 184,000 new claims for unemployment insurance, a decrease of 2,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended April 9 was 1.0%, a decrease of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended April 9 was 1,417,000, a decrease of 58,000 from the previous week’s level. This is the lowest level for insured unemployment since February 21, 1970, when it was 1,412,000. States and territories with the highest insured unemployment rates for the week ended April 2 were New Jersey (2.3%), California (2.2%), Alaska (2.0%), Minnesota (2.0%), Illinois (1.7%), Massachusetts (1.7%), New York (1.7%), Rhode Island (1.7%), Pennsylvania (1.5%), and the Virgin Islands (1.5%). The largest increases in initial claims for the week ended April 9 were in Missouri (+7,194), Michigan (+5,950), California (+3,215), Indiana (+3,193), and Texas (+2,617), while the largest decreases were in Ohio (-3,886), Wisconsin (-1,159), Oklahoma (-776), Utah (-270), and Hawaii (-219).

Eye on the Week Ahead

There’s plenty of important economic data out this week, headlined by the initial estimate for the first-quarter gross domestic product. The March report on personal income and outlays is also available at the end of the week. Personal income rose 0.5% in February, while consumer spending increased 0.2%. Consumer prices advanced 0.6% in February and were up 6.4% since February 2021.

What I’m Watching This Week – 18 April 2022

The Markets (as of market close April 14, 2022)

Stocks ended last week mostly lower. Each of the benchmark indexes listed here closed down during the holiday-shortened week, as Wall Street was closed in observance of Good Friday. Tech shares slid lower, pulling the Nasdaq down 2.6%. The S&P 500 also fell more than 2.0% for the week. Only the Russell 2000 pushed higher. Ten-year Treasury yields, the dollar, and gold prices advanced. Crude oil prices, which had fallen in recent weeks, reversed course, climbing more than $8.00 per barrel. Inflationary indicators showed no slowdown in March, with consumer prices climbing 1.2%, pushed higher by rising oil prices resulting from the Russia-Ukraine war. Among the market sectors, energy and utilities were the only areas to gain for the week, while information technology and communication services were the worst performers.

Treasury yields rose and stock prices fell to begin the week last Monday. Tech shares and energy stocks led the decline. The Nasdaq lost 2.2% on the day after falling nearly 4.0% the previous week, marking the worst performance since late January for the tech-heavy index. The S&P 500 dipped 1.7%, the Dow fell 1.2%, the Russell 2000 slipped 0.7%, and the Global Dow fell 0.5%. Bond prices also dropped, sending yields higher. Ten-year Treasury yields jumped 6.7 basis points to 2.78%. The dollar and gold prices advanced. Crude oil prices declined $3.30 to $94.97 per barrel.

Despite gains earlier in the day, stocks closed last Tuesday down. Investors pulled away from equities, resuming worries that the Fed will accelerate interest-rate increases following the latest data from the Consumer Price Index (see below). The Dow, the S&P 500, and the Nasdaq fell about 0.3%, while the Global Dow dipped 0.5%. The small caps of the Russell 2000 increased 0.3%. Ten-year Treasury yields fell 5.5 basis points to 2.72% as rising bond prices pulled yields lower. Energy shares rose 1.7% as crude oil prices surged 6.8% to $100.70 per barrel. The dollar and gold prices increased.

Wall Street bounced back last Wednesday, with each of the benchmark indexes listed here posting solid gains. The Nasdaq led the increase, climbing 2.0%, followed by the Russell 2000 (1.9%), the S&P 500 (1.1%), the Dow (1.0%), and the Global Dow (0.7%). Ten-year Treasury yields slipped 3.8 basis points to 2.68%. The dollar also fell, while crude oil prices continued to advance, adding $3.72 per barrel to reach $104.32 per barrel. Consumer discretionary led the market sectors, advancing 2.5%.

Stocks ended the holiday-shortened week lower last Thursday. Each of the benchmark indexes ended the day in the red, led by the Nasdaq (-2.1%) and the S&P 500 (-1.2%). The Russell 2000 slid 1.0%, the Dow fell 0.3%, and the Global Dow dipped 0.1%. Energy was the only sector to gain ground, while information technology dropped 2.5%. The yield on 10-year Treasuries rose 14 basis points to 2.82%. Crude oil prices reached $106.24 per barrel, an increase of nearly $2.00 per barrel. The dollar advanced, while gold prices fell.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 4/14Weekly ChangeYTD Change
DJIA36,338.3034,721.1234,721.12-0.78%-5.19%
Nasdaq15,644.9713,711.0013,711.00-2.63%-14.66%
S&P 5004,766.184,488.284,488.28-2.13%-7.84%
Russell 20002,245.311,994.561,994.560.52%-10.70%
Global Dow4,137.634,055.474,055.47-0.48%-2.46%
Fed. Funds target rate0.00%-0.25%0.25%-0.50%0.25%-0.50%0 bps25 bps
10-year Treasuries1.51%2.71%2.82%11 bps131 bps
US Dollar-DXY95.6499.85100.310.46%4.88%
Crude Oil-CL=F$75.44$97.86$106.248.56%40.83%
Gold-GC=F$1,830.30$1,948.40$1,975.501.39%7.93%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • Consumer prices vaulted 1.2% higher in March and have risen 8.5% over the past 12 months. Increases in the indexes for gasoline (18.3%), shelter (0.5%), and food (1.0%) were the largest contributors to the overall CPI increase. The shelter index was by far the biggest factor in the increase, with a broad set of other indexes also contributing, including those for airline fares, household furnishings and operations, medical care, and motor vehicle insurance. In contrast, the index for used cars and trucks fell 3.8%. It should be noted that a major contributing factor in the March CPI increase was the surge in fuel prices following Russia’s invasion of Ukraine. The 12-month increase was the largest since the period ended December 1981. This latest data will likely support a more aggressive response from the Federal Reserve with interest-rate hikes and a faster reduction in bond holdings.
  • Prices at the producer level increased 1.4% in March. Over the past 12 months, producer prices have moved up 11.2%, the largest increase since data was first calculated in November 2010. In March, goods prices advanced 2.3%, while prices for services increased 0.9%. Since March 2021, producer prices less foods, energy, and trade services increased 7.0%. As with consumer prices, much of the increase in producer prices in March is attributable to a jump in energy prices, spurred higher by the Russia-Ukraine war.
  • March saw inflationary pressures continue in international trade. Import prices advanced 2.6% last month, while export prices rose 4.5%. The March increase in imports was the largest monthly increase since April 2011. Import prices have risen 12.5% since March 2021. Import fuel prices advanced 14.6% in March — the largest one-month increase since July 2020. Regarding export prices, the March advance was the largest monthly increase since January 1989 when data was first calculated. Export prices have increased 18.8% over the 12 months ended in March.
  • Retail sales rose 0.5% in March and 6.9% since March 2021. Retail trade sales were up 0.4% last month from February and increased 5.5% year over year. Gasoline station sales jumped 8.9% in March, general merchandise store sales rose 5.4%, sales at food services and drinking places increased 1.0%, and food and beverage store sales climbed 1.0%. Conversely, sales from motor vehicle and parts dealers fell 1.9%, and online sales slid 6.4%.
  • The federal budget deficit in March was $192.7 billion, $467.0 billion lower than the March 2021 deficit. Through the first six months of the fiscal year, the deficit sits at $668.3 billion, over 61.0% lower than the deficit over the same period in the previous fiscal year. Compared to fiscal year 2021, government expenditures are down 18.0% so far this fiscal year, while receipts are up 25.0%. Contributing to the increase in government receipts is a 36.0% increase in individual income tax receipts and a 22.0% jump in corporate tax receipts.
  • Total industrial production advanced 0.9% in March and rose at an annual rate of 8.1% for the first quarter. Total industrial production in March was 5.5% above its year-earlier level. Manufacturing output gained 0.9% in March, pushed higher by a 7.8% jump in the output of motor vehicles and parts, while factory output elsewhere moved up 0.4%. The index for utilities increased 0.4%, and the index for mining advanced 1.7%.
  • The national average retail price for regular gasoline was $4.091 per gallon on April 11, $0.079 per gallon less than the prior week’s price but $1.242 higher than a year ago. Also as of April 11, the East Coast price decreased $0.08 to $4.00 per gallon; the Gulf Coast price fell $0.08 to $3.73 per gallon; the Midwest price slid $0.08 to $3.90 per gallon; the West Coast price decreased $0.08 to $5.14 per gallon; and the Rocky Mountain price was unchanged at $4.14 per gallon. Residential heating oil prices averaged $3.32 per gallon, about $0.11 per gallon less than the prior week’s price. U.S. crude oil refinery inputs averaged 15.5 million barrels per day during the week ended April 8, which was 424,000 barrels per day less than the previous week’s average. During the week ended April 8, refineries operated at 90.0% of their operable capacity. Gasoline production increased last week, averaging 9.5 million barrels per day.
  • For the week ended April 9, there were 185,000 new claims for unemployment insurance, an increase of 18,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended April 2 was 1.1%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended April 2 was 1,475,000, a decrease of 48,000 from the previous week’s level. States and territories with the highest insured unemployment rates for the week ended March 26 were California (2.4%), New Jersey (2.3%), Alaska (2.1%), Minnesota (2.0%), Massachusetts (1.9%), Rhode Island (1.9%), New York (1.8%), Georgia (1.7%), Illinois (1.7%), and Puerto Rico (1.7%).The largest increases in initial claims for the week ended April 2 were in Ohio (+1,509), Pennsylvania (+1,478), California (+1,082), Illinois (+509), and Florida (+466), while the largest decreases were in Michigan (-2,491), Texas (-2,487), New Jersey (-1,105), Kentucky (-1,046), and New York (-866).

Eye on the Week Ahead

This week, economic news focuses on the housing sector with the release of the housing starts report and the latest existing home sales data for March. Building permits and existing home sales fell in February but are expected to rebound in March.

What I’m Watching This Week – 11 April 2022

The Markets (as of market close April 8, 2022)

Stocks lost value last week as each of the benchmark indexes listed here finished lower. The Nasdaq and the Russell 2000 were hit the hardest, followed by the Global Dow, the S&P 500, and the Dow. Ten-year Treasury yields jumped 34 basis points as bond prices slid lower. The dollar strengthened against a bucket of currencies, and gold prices climbed higher. Crude oil prices declined by $1.66 per barrel over the week. Most of the market activity was influenced by the release of the minutes from the last meeting of the Federal Open Market Committee, which revealed the Fed’s intend to aggressively target inflation with monetary-policy tightening. The minutes also indicated that, but for the disruption of Russia’s invasion of Ukraine on global markets, the Fed would have raised interest rates by 50 basis points last month.

Wall Street began the week on a positive note. Each of the benchmark indexes listed here closed last Monday higher, led by the Nasdaq, which added 1.9%. The S&P 500 climbed 0.8% and the Dow rose 0.3%. Tech shares led the upswing, while consumer discretionary and communication services paced the sectors. Ten-year Treasury yields added 3.5 basis points to reach 2.41%. The dollar and gold prices also advanced. Crude oil prices rose $4.34 to $103.61 per barrel.

Stocks retreated last Tuesday, with each of the indexes listed here closing in the red. Most equity sectors fell with information technology and consumer discretionary giving back Monday’s gains. The Russell 2000 (-2.4%) and the Nasdaq (-2.3%) fell the furthest, followed by the S&P 500 (-1.3%), the Global Dow (-1.2%), and the Dow (-0.8%). The dollar and 10-year Treasury yields advanced, while crude oil prices fell to $101.21 per barrel.

Last Wednesday saw stocks fall for the second consecutive day. The minutes from the last Federal Reserve meeting in March showed that officials were focused on slowing inflation by raising interest rates and quickly reducing the Fed’s balance sheet. Tech shares fell, pulling the Nasdaq down 2.2%. The Russell 2000 dropped 1.4%, while the S&P 500 and the Global Dow lost 1.0%. The Dow slid 0.4%. Ten-year Treasury yields jumped 5.3 basis points to 2.6%. Crude oil prices decreased $5.11 to $96.85 per barrel. The dollar and gold prices were relatively flat. Among the market sectors, utilities, real estate, health care, and consumer staples advanced, while information technology dropped 2.6%.

Stocks rebounded last Thursday following a two-day slump. The S&P 500 added 0.4% as several of the market sectors advanced, with energy, health care, and consumer staples leading the gainers. The Dow rose 0.3% and the Nasdaq eked out a 0.1% gain. The Russell 2000 and the Global Dow slipped. Ten-year Treasury yields rose to 2.65%, the dollar and gold prices increased, and crude oil prices rose to $97.13 per barrel. Wall Street closed mostly lower last Friday as stocks and bond prices declined. The Dow (0.4%) and the Global Dow (0.6%) closed higher, but the Nasdaq (-1.3%), the Russell 2000 (-0.8%), and the S&P 500 (-0.3%) ended the day in the red. Treasury prices slid, driving yields up 6 basis points to 2.71%. Crude oil prices increased $1.83 to $97.86 per barrel. The dollar and gold prices also advanced.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 4/8Weekly ChangeYTD Change
DJIA36,338.3034,818.2734,721.12-0.28%-4.45%
Nasdaq15,644.9714,261.5013,711.00-3.86%-12.36%
S&P 5004,766.184,545.864,488.28-1.27%-5.83%
Russell 20002,245.312,091.111,994.56-4.62%-11.17%
Global Dow4,137.634,110.704,055.47-1.34%-1.99%
Fed. Funds target rate0.00%-0.25%0.25%-0.50%0.25%-0.50%0 bps25 bps
10-year Treasuries1.51%2.37%2.71%34 bps120 bps
US Dollar-DXY95.6498.5499.851.33%4.40%
Crude Oil-CL=F$75.44$99.52$97.86-1.67%29.72%
Gold-GC=F$1,830.30$1,926.70$1,948.401.13%6.45%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • The latest goods and services trade report, out April 5, was for February and showed the trade deficit slipped 0.1% from January. Exports were $4.1 billion, or 1.8%, more than January exports, and imports were $4.1 billion, or 1.3%, above January. Year to date, the goods, and services deficit increased $45.7 billion, or 34.5%, from the same period in 2021. Exports increased $68.0 billion, or 17.6%. Imports increased $113.7 billion, or 22.0%.
  • The services sector reported a strong upturn in business activity in March, according to the latest data from the S&P Global US Services PMI Business Activity Index. The expansion in output quickened to the fastest in four months amid stronger demand conditions and a steeper rise in new orders. Nevertheless, output prices increased markedly and were passed on to customers.
  • The national average retail price for regular gasoline was $4.170 per gallon on April 4, $0.061 per gallon less than the prior week’s price but $1.313 higher than a year ago. Also as of April 4, the East Coast price decreased $0.05 to $4.05 per gallon; the Gulf Coast price fell $0.07 to $3.82 per gallon; the Midwest price slid $0.08 to $3.97 per gallon; the West Coast price decreased $0.05 to $5.22 per gallon, and the Rocky Mountain price declined $0.02 to $4.14 per gallon. Residential heating oil prices averaged $3.42 per gallon, about $0.69 per gallon less than the prior week’s price. U.S. crude oil refinery inputs averaged 15.9 million barrels per day during the week ended April 1, which was 35,000 barrels per day more than the previous week’s average. During the week ended April 1, refineries operated at 92.5% of their operable capacity. Gasoline production increased last week, averaging 9.1 million barrels per day.
  • For the week ended April 2, there were 166,000 new claims for unemployment insurance, a decrease of 5,000 from the previous week’s level, which was revised down by 31,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended March 26 was 1.1%, unchanged from the previous week’s rate, which was revised up by 0.2 percentage point. The advance number of those receiving unemployment insurance benefits during the week ended March 26 was 1,523,000, an increase of 17,000 from the previous week’s level, which was revised up by 199,000. States and territories with the highest insured unemployment rates for the week ended March 19 were California (2.4%), New Jersey (2.4%), Alaska (2.2%), Illinois (2.1%), Rhode Island (2.1%), Massachusetts (2.0%), Minnesota (2.0%), New York (1.9%), and the Virgin Islands (1.7%). The largest increases in initial claims for the week ended March 26 were in Ohio (+3,580), Michigan (+3,545), California (+3,256), Texas (+2,251), and New York (+761), while the largest decreases were in Kentucky (-2,034), Pennsylvania (-732), Tennessee (-235), Florida (-165), and Connecticut (-138).

Eye on the Week Ahead

Inflationary data is available this week with the release of the Consumer Price Index, the Producer Price Index, import and export prices, and the retail sales report. Since February 2021, the CPI is up 7.5%, producer prices have advanced 10.0%, import prices have climbed 10.9%, and export prices have risen 16.6%.

What I’m Watching This Week – 4 April 2022

The Markets (as of market close April 1, 2022)

Stocks closed generally higher last week, with only the Dow failing to post a gain. As has been the case since the end of February, investors have had to weigh the impact of the Russia-Ukraine war on the economy in general and inflation in particular. Adding to the list of concerns is the Federal Reserve’s monetary policy in response to surging inflationary pressures. Among the market sectors, real estate, utilities, and consumer staples were the best performers. Unlike the Dow, which slid 0.1% the Nasdaq and the Russell 2000 gained over 0.6%, while the Global Dow eked out a minimal gain. Crude oil prices fell more than $13.00 per barrel last week as worries over fuel shortages abated somewhat. Ten-year Treasury yields slipped as bond prices rose. Gold prices and the dollar also declined.

The Dow, the S&P 500, and the Nasdaq advanced to begin last week, while the Russell 2000 and the Global Dow ended the day flat. Investors were likely monitoring potentially favorable developments ahead of the latest negotiations for an end to the war between Russia and Ukraine. A rise in tech shares helped drive the Nasdaq up 1.3%, the S&P 500 rose 0.7%, and the Dow added 0.3%. Crude oil prices dipped more than $10.00 to $103.28 per barrel. Ten-year Treasury yields slid slightly to 2.47%. The dollar advanced, while gold prices dropped nearly $36.00 to $1,918.40 per ounce.

Stocks jumped higher last Tuesday after signs of hope emerged from Russia-Ukraine peace talks. Each of the benchmark indexes listed here closed higher, led by the Russell 2000, which gained 2.7%, followed by the Nasdaq (1.8%), the Global Dow (1.4%), the S&P 500 (1.2%), and the Dow (1.0%). Yields on 10-year Treasuries dipped nearly 8.0 basis points to 2.40%. The dollar fell, while crude oil prices advanced $1.20 to $105.44 per barrel.

The benchmark indexes fell for the first time in five days last Wednesday as hopes faded for a resolution to the Russia-Ukraine. The Russell 2000 dropped 2.0% and the Nasdaq fell 1.2% to lead the declines. The S&P 500 dipped 0.6% and the Dow lost 0.2%. The Global Dow was flat. Ten-year Treasuries and the dollar slid marginally, while crude oil and gold prices advanced.

Stocks continued their tumble last Thursday as each of the benchmark indexes listed here ended the day in the red. The Dow, the Nasdaq, and the S&P 500 each lost 1.5%. The Russell 2000 slid 1.0% and the Global Dow dropped 1.2%. Yields on 10-year Treasuries and the dollar were relatively flat. Crude oil prices decreased to $100.09 per barrel on news that President Biden would release up to 180 million barrels of oil from U.S. reserves.

Stocks traded higher last Friday on the heels of a strong labor report. The Russell 2000 led the surge, closing the day up 0.9%, followed by the Dow (0.4%), the S&P 500 and the Nasdaq (0.3%), and the Global Dow (0.1%). Yields on 10-year Treasuries added 5.0 basis points to reach 2.37%. Crude oil prices fell for the second consecutive day, falling $0.76 to $99.52 per barrel. The dollar inched higher, while gold prices slid.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 4/1Weekly ChangeYTD Change
DJIA36,338.3034,861.2434,818.27-0.12%-4.18%
Nasdaq15,644.9714,169.3014,261.500.65%-8.84%
S&P 5004,766.184,543.064,545.860.06%-4.62%
Russell 20002,245.312,077.982,091.110.63%-6.87%
Global Dow4,137.634,104.984,110.700.14%-0.65%
Fed. Funds target rate0.00%-0.25%0.25%-0.50%0.25%-0.50%0 bps25 bps
10-year Treasuries1.51%2.49%2.37%-12 bps86 bps
US Dollar-DXY95.6498.8298.54-0.28%3.03%
Crude Oil-CL=F$75.44$113.00$99.52-11.93%31.92%
Gold-GC=F$1,830.30$1,954.10$1,926.70-1.40%5.27%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • The labor sector continues to expand at an accelerated pace after adding 431,000 new jobs in March. The February total was upwardly revised from 678,000 to 750,000. The unemployment rate slid 0.2 percentage point to 3.6% in March, and the number of unemployed persons decreased by 318,000 to 6.0 million. These measures are little different from their values in February 2020 (3.5% and 5.7 million, respectively), prior to the coronavirus pandemic. The labor force participation rate inched up 0.1 percentage point to 62.4%, while the employment-population ratio increased 0.2 percentage point to 60.1%. In March, 10.0% of employed persons teleworked because of the coronavirus pandemic, down from 13.0% in the prior month, while 2.5 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic, which is a decrease of 4.2 million from the February estimate. Average hourly earnings rose by $0.13 to $31.73 in March. Over the past 12 months, average hourly earnings have increased by 5.6%. The average workweek fell by 0.1 hour to 34.6 hours in March.
  • The personal consumption expenditures price index from the personal income and outlays report is the Federal Reserve’s preferred measure of inflation. In February, the PCE price index rose 0.6% after advancing 0.5% in January. For the 12 months ended in February, the PCE price index rose 6.4%. Over the same period, energy prices increased 25.7%, while food prices increased 8.0%. In February, personal income and disposable personal income advanced 0.5% and 0.4%, respectively. Personal consumption expenditures inched up 0.2% in February after climbing 2.7% in January.
  • The third and final estimate of the fourth-quarter gross domestic product showed the economy advanced at an annualized rate of 6.9%. GDP increased 2.3% in the third quarter. The fourth-quarter advance was attributable to increases in private inventory investment, exports, personal consumption expenditures, and nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased. Consumer prices, as measured by the personal consumption expenditures price index, increased 6.4% in the fourth quarter of 2021 compared to a 5.3% increase in the third quarter.
  • According to the S&P Global U.S. Manufacturing Purchasing Managers’ Index™, March signaled a sharp improvement in operating conditions across the manufacturing sector. Output and new orders increased, although backlogs of work rose at a sharper pace, largely due to an increase in new sales. Nevertheless, survey respondents noted fewer supply bottlenecks, which allowed production to expand at a faster rate. However, costs continued to soar as the rate of price inflation quickened.
  • According to the latest information from the Census Bureau, the trade in goods deficit for February dipped 0.9% to $106.6 billion. Exports of goods for February were $157.2 billion, $1.9 billion more than January exports. Imports of goods for February were $263.7 billion, $0.9 billion more than January imports.
  • According to the latest report from the Bureau of Labor Statistics, on the last business day of February, the number and rate of job openings were little changed at 11.3 million and 7.0%, respectively. Job openings decreased in finance and insurance (-63,000) and in nondurable goods manufacturing (-39,000). Job openings increased in arts, entertainment, and recreation (+32,000); educational services (+26,000); and federal government (+23,000). The number of hires rose by 263,000 to 6.7 million. Total separations, quits, and layoffs and discharges were little changed in February. Over the 12 months ended in February 2022, hires totaled 77.0 million and separations totaled 70.6 million, yielding a net employment gain of 6.4 million.
  • The national average retail price for regular gasoline was $4.231 per gallon on March 28, $0.008 per gallon less than the prior week’s price but $1.379 higher than a year ago. Also as of March 28, the East Coast price decreased $0.04 to $4.09 per gallon; the Gulf Coast price fell $0.06 to $3.88 per gallon; the Midwest price rose $0.02 to $4.05 per gallon; the West Coast price increased $0.05 to $5.27 per gallon; and the Rocky Mountain price advanced $0.06 to $4.17 per gallon. Residential heating oil prices averaged $5.13 per gallon, about $0.24 per gallon above the prior week’s price and $2.26 per gallon higher than last year’s price at this time. Residential propane prices averaged $2.98 per gallon, $0.01 per gallon higher than the previous week’s price and $0.69 per gallon above last year’s price. U.S. crude oil refinery inputs averaged 15.9 million barrels per day during the week ended March 25, which was 35,000 barrels per day more than the previous week’s average. During the week ended March 25, refineries operated at 92.1% of their operable capacity. Gasoline production decreased last week, averaging 9.1 million barrels per day.
  • For the week ended March 26, there were 202,000 new claims for unemployment insurance, an increase of 14,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended March 19 was 0.9%, a decrease of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended March 19 was 1,307,000, a decrease of 35,000 from the previous week’s level, which was revised down by 8,000. This is the lowest level for insured unemployment since December 27, 1969, when it was 1,304,000. States and territories with the highest insured unemployment rates for the week ended March 12 were California (2.5%), Alaska (2.3%), New Jersey (2.3%), Rhode Island (2.2%), Massachusetts (2.1%), Minnesota (2.1%), New York (2.0%), Illinois (1.9%), Connecticut (1.7%), Montana (1.7%), and Pennsylvania (1.7%). The largest increases in initial claims for the week ended March 19 were in Florida (+956), Pennsylvania (+476), Oklahoma (+400), Tennessee (+328), and Connecticut (+161), while the largest decreases were in California (-5,831), Michigan (-4,876), Kentucky (-2,579), Kansas (-2,070), and Illinois (-2,053).

Eye on the Week Ahead

There’s very little in the way of economic reports this week. The latest data on the goods and services trade balance is for February. The trade deficit in January was $89.7 billion. Also out this week is the March Purchasing Managers’ Index for the services sector. February saw sales advance at their fastest rate since August 2021.

Quarterly Market Review: January – March 2022

The Markets (first quarter through March 31, 2022)

Wall Street dealt with several major issues in the first quarter of 2022. Investors had to evaluate the impact of rising inflation, higher interest rates, ongoing coronavirus concerns, and the Russia-Ukraine war. Each of the benchmark indexes listed here lost value by the end of the quarter. However, Treasury yields, the dollar, gold, and crude oil prices ended the first quarter higher. Among the market sectors, energy increased nearly 40.0%, while utilities climbed about 5.0%. The remaining sectors ended the quarter in the red, with consumer services (-12.0%) and information technology (-8.0%) losing the most.

The yield on 10-year Treasuries rose nearly 80 basis points. Crude oil prices increased nearly $28.00 per barrel, or 38.0%, in the first quarter. The dollar gained nearly 2.8%, while gold prices advanced more than 6.0%. The national average price for regular gasoline was $4.231 per gallon on March 28, $0.950 higher than the January 3 price of $3.281 and $1.379 higher than a year ago.

January began the quarter with stocks reaching new all-time highs. Unfortunately, that was the high point of the month for Wall Street. The first month of the year turned out to be a pretty rough one for investors. The Russell 2000 lost 9.7%, the Nasdaq slid 9.0%, the S&P 500 dipped 5.3%, the Dow fell 3.3%, and the Global Dow slipped 0.6%. In all, January produced the worst first-month performance since 2009, and that includes a notable rally over the last two days of the month. Investors dealt with concerns over rising inflation, the prospects of higher interest rates, and the pace of global economic recovery, despite the fourth-quarter U.S. GDP advancing at an annualized rate of 6.9%, while nearly 200,000 new jobs were added. On the other hand, industrial production slowed and new orders for durable goods declined. Prices at the pump increased, closing the month at about $3.323 per gallon for regular gasoline. Ten-year Treasury yields, the dollar, and crude oil prices climbed higher, while gold prices fell.

February also opened the month on a high note, but stocks tumbled into the red by the end of the month. The S&P 500 fell to its lowest level since June 2021. Not only were investors still coping with rising inflation and interest-rate hikes, but a new crisis emerged in February — Russia’s invasion of Ukraine. The United States and several other nations imposed sanctions against Russia, some of which were aimed at curtailing Russian oil and natural gas exports, which resulted in a surge in energy prices. Initially, the conflict in Ukraine shook global financial markets as stocks fell, and concerns grew that heating bills and food prices would skyrocket. By the close of the month, the Dow, the S&P 500, and the Nasdaq fell more than 3.0%. Ten-year Treasury prices initially fell on inflation worries, although yields later advanced as bond prices receded. The dollar and gold prices rose. Crude oil prices jumped more than 8.0% from the previous month, reaching $95.62 per barrel on the last day of February.

Despite attempts at peace talks, the war in Ukraine intensified in March, prompting the imposition of more economic sanctions against Russia. Inflationary pressures continued to mount, which led the Federal Reserve to raise interest rates 25 basis points with additional rate hikes anticipated. Nevertheless, stocks showed resilience. Each of the benchmark indexes posted gains from February. The S&P 500 rose 5.0%, the Nasdaq gained 4.7%, the Dow added 3.6%, the Russell 2000 climbed 2.1%, and the Global Dow increased 1.9%. Although crude oil prices were trending lower by the end of March, they were still $8.00 per barrel higher than where they began the month. The yield on 10-year Treasuries advanced nearly 50 basis points. The dollar gained 1.5%, and gold prices climbed 1.9% to $1,945.70 per ounce.

Stock Market Indexes

Market/Index2021 CloseAs of March 31Monthly ChangeQuarterly ChangeYTD Change
DJIA36,338.3034,678.352.32%-4.57%-4.57%
Nasdaq15,644.9714,220.523.41%-9.10%-9.10%
S&P 5004,766.184,530.413.58%-4.95%-4.95%
Russell 20002,245.312,070.131.08%-7.80%-7.80%
Global Dow4,137.634,098.731.19%-0.94%-0.94%
Fed. Funds0.00%-0.25%0.25%-0.50%25 bps25 bps25 bps
10-year Treasuries1.51%2.32%49 bps81 bps81 bps
US Dollar-DXY95.6498.351.71%2.83%2.83%
Crude Oil-CL=F$75.44$100.945.56%33.80%33.80%
Gold-GC=F$1,830.30$1,941.501.65%6.08%6.08%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Latest Economic Reports

  • Employment: Employment rose by 678,000 in February, notably higher than the January revised total of 481,000. Despite the increase, employment is down by 2.1 million, or 1.4%, from its pre-pandemic level in February 2020. The unemployment rate inched down by 0.2 percentage point to 3.8%. The number of unemployed persons decreased 243,000 in February to 6.3 million. By comparison, in February 2020 prior to the coronavirus (COVID-19) pandemic, the unemployment rate was 3.5%, and the number of unemployed persons was 5.7 million. Among the unemployed, the number of workers who permanently lost their jobs declined by 100,000 to 1.5 million in February. Also in February, the number of persons who were unable to work because their employer closed or lost business due to the pandemic fell to 4.2 million. The labor force participation rate increased 0.1 percentage point to 62.3% in February. The employment-population ratio increased by 0.2 percentage point to 59.9%. In February, average hourly earnings were relatively unchanged at $31.58. Over the last 12 months, average hourly earnings rose by 5.1%. The average work week rose by 0.1 hour to 34.7 hours in February.
  • There were 202,000 initial claims for unemployment insurance for the week ended March 26. Over the first three months of 2022, initial weekly claims and total claims for unemployment insurance benefits steadily decreased. As of March 19, there were 1,307,000 total claims for unemployment benefits. This is the lowest level for insured unemployment since December 27, 1969, when it was 1,304,000. A year ago, there were 3,753,000 total claims for unemployment insurance benefits.
  • FOMC/interest rates: Following its meeting in March, the Federal Open Market Committee increased the federal funds target rate range by 25 basis points to 0.25%-0.50%. In support of its decision, the Committee noted that inflation remains elevated due to imbalances related to the pandemic, higher energy prices, the Russia-Ukraine conflict, and broader price pressures. In addition, the FOMC anticipates six more rate hikes, some could be by as much as 50 basis points.
  • GDP/budget: Gross domestic product rose 6.9% in the fourth quarter of 2021 compared with a 2.3% advance in the third quarter. The increase in GDP primarily reflected increases in private inventory investment, exports, personal consumption expenditures, and nonresidential fixed investment that were partly offset by decreases in both federal and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased. Consumer spending, as measured by personal consumption expenditures, was 2.5% in the fourth quarter (2.0% in the third quarter). Spending on goods rose by 1.1%, while spending on services climbed 3.3%. The PCE price index, a measure of inflation, increased 6.4% in the fourth quarter after advancing 5.3% in the third quarter. Gross private domestic investment, which includes nonresidential and residential fixed investment, vaulted 36.7% in the fourth quarter after gaining 12.4% in the third quarter. Nonresidential (business) fixed investment increased 2.9% (1.7% in the third quarter), while residential fixed investment increased 2.2% (-7.7% in the third quarter). Exports jumped 22.4% in the fourth quarter after falling 5.3% in the prior quarter. Imports climbed 17.9% following a 4.7% rise in the third quarter.
  • The Treasury budget deficit came in at $216.6 billion in February, a notable jump from the surplus of $118.7 billion in January. By comparison, the deficit in February 2021 was $310.9 billion. Through the first five months of fiscal year 2022, the deficit sits at $475.6 billion, 55.0% lower than the deficit over the same period in fiscal year 2021. So far in this fiscal year, individual income tax receipts have risen 38.0% and corporate income tax receipts have increased 31.0%. Compared to the same period last fiscal year, government expenditures fell 9.0% to $506.5 billion, while receipts rose 17.0% to $289.9 billion.
  • Inflation/consumer spending: According to the latest Personal Income and Outlays report for February, personal income rose 0.5%, while disposable personal income increased 0.4% after each increased 0.1% in January. Consumer spending increased 2.0% following a 2.7% jump in January. Consumer prices climbed 0.6% in February after advancing 0.5% in January. Consumer prices have risen 6.4% since February 2021. Year over year, energy prices vaulted 25.7%, while food prices increased 0.8%.
  • The Consumer Price Index climbed 0.8% in February after climbing 0.6% in the previous month. Increases in the indexes for gasoline, shelter, and food were the largest contributors to the CPI increase. The gasoline index rose 6.6% in February and accounted for almost a third of the overall February increase. Since February 2021, the CPI has risen 7.9% — the largest increase since the period ending January 1982.
  • Prices that producers receive for goods and services jumped 0.8% in February following a 1.2% increase in January. Producer prices have increased 10.0% since February 2021. Prices less foods, energy, and trade services increased 0.9% in January, the largest increase since rising 1.0% in January 2021. For the year, prices less foods, energy, and trade services moved up 6.6%. In February, prices for goods jumped 2.4%, while prices for services were unchanged. A major factor in the February increase in the prices for goods was an 8.2% increase in energy prices, within which gasoline prices spiked 14.8%.
  • Housing: Sales of existing homes reversed course, falling 7.2% in February after advancing 6.7% in January. Year over year, existing home sales were 2.4% under the February 2021 estimate. According to the latest survey from the National Association of Realtors®, housing affordability continues to be a major challenge, as buyers are getting a double whammy: rising mortgage rates and sustained price increases. The median existing-home price was $357,300 in February, up from $350,300 in January and 15.0% more than February 2021 ($310,600). Unsold inventory of existing homes represents a 1.7-month supply at the current sales pace. Sales of existing single-family homes also fell, down 7.0% in February after rising 6.5% the previous month. Since February 2021, sales of existing single-family homes have fallen 2.2%. The median existing single-family home price was $363,800 in February, up from $357,100 in January.
  • Sales of new single-family homes fell 2.0% in February after decreasing 8.4% (revised) in January. The median sales price of new single-family houses sold in February was $400,600 ($427,400 in January). The February average sales price was $511,000 ($494,000 in January). The inventory of new single-family homes for sale in February represented a supply of 6.3 months at the current sales pace, up from January’s 6.1-month supply. Sales of new single-family homes in February were 6.2% below the February 2021 estimate.
  • Manufacturing: Industrial production increased 0.5% in February following a 1.4% increase in January. In February, manufacturing rose 1.2% and mining increased 0.1%, while utilities fell 2.7%. Total industrial production in February was 7.5% higher than it was a year earlier. Since February 2021, manufacturing has risen 7.4%, mining has jumped 17.3%, while utilities decreased 1.2%.
  • February saw new orders for durable goods decrease 2.2%. This decrease, down after four consecutive monthly increases, followed a 1.6% January increase. Excluding transportation, new orders fell 0.6% in February. Excluding defense, new orders dropped 2.7%. Transportation equipment, down following three consecutive monthly increases, led the decrease, declining 5.6%.
  • Imports and exports: Import prices rose 1.4% in February after advancing 1.9% in January, according to the U.S. Bureau of Labor Statistics. Higher fuel and nonfuel prices drove the increases in both months. Contributing to the increase in February import prices was a 6.9% jump in fuel prices. Prices for nonfuel imports rose 0.8% in February. For the 12 months ended in February, prices for imports have advanced 10.9%. Over the same period, prices for fuel have increased 53.0%. Prices for U.S. exports advanced 3.0% in February following a 2.8% rise the previous month. The February advance in export prices was the largest since January 1989. Higher prices for both agricultural and nonagricultural exports in January contributed to the overall increase in U.S. export prices. Export prices have risen 16.6% since February 2021.
  • The international trade in goods deficit was $106.6 billion in February, down $1.0 billion, or 0.9%, from January. Exports of goods were $157.2 billion in February, $1.9 billion more than in January. Imports of goods were $263.7 billion, $0.9 billion more than January imports.
  • The latest information on international trade in goods and services, released March 8, is for January and shows that the goods and services trade deficit rose by $7.7 billion to $82.0 billion from the December 2021 deficit. January exports were $224.4 billion, $3.9 billion less than December exports. January imports were $314.1 billion, $3.8 billion more than December imports. Year over year, the goods and services deficit increased $24.6 billion, or 37.7%, from the same period in 2021. Exports increased $29.9 billion, or 15.4%. Imports increased $54.4 billion, or 21.0%.
  • International markets: While business activity in the United States picked up, despite the turmoil in Ukraine, Europe hasn’t been quite as fortunate. Most of Europe has seen the war exacerbate already strained supply chains, which has sent prices for raw materials and energy soaring — despite the lifting of most pandemic-related restrictions. The European Central Bank lowered its forecast for economic growth in the eurozone from 4.2% to 3.7%, while acknowledging that the impact of the Russian invasion could be larger. In Japan, the government proposed more measures to boost the economy. China saw a drop in stock prices after reports of a worsening coronavirus outbreak across the mainland. Overall, for the markets in March, the STOXX Europe 600 Index rose 3.1%. The United Kingdom’s FTSE gained 2.0%. Japan’s Nikkei 225 Index climbed 6.2%, while China’s Shanghai Composite Index fell 6.3%.
  • Consumer confidence: The Conference Board Consumer Confidence Index® rose slightly in March following a decline in February. The index stands at 107.2, up from 105.7 in February. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, improved to 153.0 in March, up from 143.0 in February. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, declined to 76.6 in March, down from 80.8 in February.

Eye on the Month Ahead

Despite accelerating inflation, the war in Ukraine, and rising interest rates, most economic indicators are still demonstrating varying degrees of strength. However, March data may begin to show some economic slowing. Gross domestic product, which ran at an annualized rate of nearly 7.0% in February, is likely to recede, while the pace of job growth may decelerate. While the Federal Open Market Committee does not meet in April, it is expected to push interest rates up by 50 basis points in May. Hopefully, a resolution to the Russia-Ukraine conflict is near.

What I’m Watching This Week – 28 March 2022

The Markets (as of market close March 25, 2022)

Wall Street closed higher for the second consecutive week, despite several days where stock values seesawed. The tech-heavy Nasdaq led the gainers, followed by the S&P 500, the Global Dow, and the Dow. The small caps of the Russell 2000 edged lower. Information technology was the worst-performing sector, while energy had the biggest gains. Investors mulled the impact of inflation and tightening monetary policy, while President Joe Biden and NATO allies leveled a new set of sanctions against Russia. Crude oil prices shot higher at the end of the week after reports of a missile strike at a Saudi Aramco facility.

Equities began last week in the red as hawkish comments from Federal Reserve Chair Jerome Powell and escalating crude oil prices weighed on investors. Last Monday saw the Dow dip 0.6%, the S&P 500 was flat, while the Nasdaq slid 0.4%. Crude oil prices, 10-year Treasury yields, and the dollar all advanced.

Stocks rebounded last Tuesday to close higher, despite Federal Reserve Chair Jerome Powell’s suggestion that higher interest-rate hikes may be needed to mitigate fast-rising inflation. Tech and growth shares rebounded from recent losses. The Nasdaq led the increase, climbing 2.0%, followed by the S&P 500 and the Russell 2000 (1.1%), the Global Dow (1.0%), and the Dow (0.7%). Ten-year Treasury yields continued to advance after gaining nearly 6 basis points to close at 2.37%. Crude oil and gold prices and the dollar all slid lower.

Equities couldn’t continue their rally last Wednesday, closing the day in the red. Investors backed away from stocks following news that there was no change in the Ukraine war, the likelihood of two 50 basis-point interest-rate increases, and weaker-than-expected new home sales figures. The Russell 2000 slid 1.7%, the Nasdaq lost 1.3%, the Dow fell 1.3%, the S&P 500 dipped 1.2%, and the Global Dow dropped 0.7%. Ten-year Treasury yields lost some momentum falling marginally to 2.32%. Crude oil prices topped $116.00 per barrel. The dollar and gold prices advanced.

In what may have been triggered by dip buyers, stocks closed higher last Thursday. Oil prices fell notably, down over 3.0% to $111.25 per barrel. New jobless claims fell to a more than 50-year low last week, while the number of unemployed continued to drop. Among the indexes, the Nasdaq led the way, advancing 1.9%, followed by the S&P 500 (1.4%), the Dow and the Russell 2000 (1.0%), and the Global Dow (0.5%). Ten-year Treasury yields rose 2 basis points to 2.34%. Gold prices jumped more than $25.00 to $1,962.40 per ounce. The dollar rose minimally.

Stocks closed mixed last Friday, as the S&P 500 and the Global Dow gained 0.5%, the Dow edged up 0.4%, the Russell 2000 was flat, and the Nasdaq slipped 0.2%. Ten-year Treasury yields added 15 basis points to close at 2.5%. Crude oil prices rose marginally to $113.00 per barrel. The dollar was flat, while gold prices fell.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 3/25Weekly ChangeYTD Change
DJIA36,338.3034,754.2134,861.240.31%-4.06%
Nasdaq15,644.9713,893.8414,169.301.98%-9.43%
S&P 5004,766.184,463.094,543.061.79%-4.68%
Russell 20002,245.312,086.142,077.98-0.39%-7.45%
Global Dow4,137.634,035.174,104.981.73%-0.79%
Fed. Funds target rate0.00%-0.25%0.25%-0.50%0.25%-0.50%0 bps25 bps
10-year Treasuries1.51%2.14%2.49%35 bps98 bps
US Dollar-DXY95.6498.1998.820.64%3.32%
Crude Oil-CL=F$75.44$104.91$113.007.71%49.79%
Gold-GC=F$1,830.30$1,920.101,954.101.77%6.76%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • According to the latest information from the Census Bureau, sales of new single-family homes fell 2.0% in February from the previous month and are 6.2% below the February 2021 estimate. The median sales price of new houses sold in February 2022 was $400,600 ($427,400 in January). The average sales price was $511,000 ($494,000 in January). The estimate of new houses for sale at the end of February was 407,000. This represents a supply of 6.3 months at the current sales rate.
  • New orders for durable goods slid 2.2% in February following four consecutive monthly increases. Excluding transportation, new orders decreased 0.6%. Excluding defense, new orders decreased 2.7%. Transportation equipment, down following three consecutive monthly increases, led the decrease, falling 5.6% in February. Nevertheless, new orders for durable goods have risen 14.2% since February 2021.
  • The national average retail price for regular gasoline was $4.239 per gallon on March 21, $0.076 per gallon less than the prior week’s price but $1.374 higher than a year ago. Also as of March 21, the East Coast price decreased $0.14 to $4.13 per gallon; the Gulf Coast price fell $0.09 to $3.94 per gallon; the Midwest price dipped $0.06 to $4.04 per gallon; the West Coast price decreased $0.07 to $5.22 per gallon; and the Rocky Mountain price declined $0.03 to $4.11 per gallon. Residential heating oil prices averaged $4.87 per gallon, about $0.06 per gallon below the prior week’s price but $2.00 per gallon higher than last year’s price at this time. Residential propane prices averaged nearly $3.00 per gallon, $0.04 per gallon lower than the previous week’s price but $0.66 per gallon above last year’s price. U.S. crude oil refinery inputs averaged 15.9 million barrels per day during the week ended March 18, which was 276,000 barrels per day more than the previous week’s average. During the week ended March 18, refineries operated at 91.1% of their operable capacity. Gasoline production averaged 8.8 million barrels per day last week.
  • For the week ended March 19, there were 187,000 new claims for unemployment insurance, a decrease of 28,000 from the previous week’s level, which was revised up by 1,000. This is the lowest level for initial claims since September 6, 1969, when it was 182,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended March 12 was 1.0%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended March 12 was 1,350,000, a decrease of 67,000 from the previous week’s level, which was revised down by 2,000. This is the lowest level for insured unemployment since January 3, 1970 when it was 1,332,000. States and territories with the highest insured unemployment rates for the week ended March 5 were California (2.5%), New Jersey (2.4%), Alaska (2.3%), Illinois (2.3%), Rhode Island (2.3%), Massachusetts (2.2%), Minnesota (2.2%), New York (2.1%), Connecticut (1.9%), and Pennsylvania (1.8%). The largest increases in initial claims for the week ended March 12 were in Michigan (+2,068), Ohio (+1,547), California (+1,274), Missouri (+850), and Illinois (+665), while the largest decreases were in New York (-16,098), Massachusetts (-1,116), New Jersey (-1,046), Washington (-992), and the District of Columbia (-945).

Eye on the Week Ahead

This week’s releases include the latest GDP data, consumer spending and price information from the personal income and outlays report, and the employment figures for March.