Month: April 2023

The Markets (as of market close April 28, 2023)

Stocks ended April generally higher, despite several lackluster sessions along the way. Each of the benchmark indexes listed here gained ground over their March closing values, except for the small caps of the Russell 2000. Investors spent most of April weighing positive news on corporate earnings against concerns about the financial strength of regional banks and the Federal Reserve’s next move relative to interest rates as it continues to battle inflation. The Dow enjoyed its best month since January. The Global Dow and the large caps of the S&P 500 also gained at least 1.5%. The Nasdaq barely eked out a gain on the heels of a strong last week of April.

Solid corporate earnings in the first quarter helped provide momentum for stocks. As of the end of April, roughly 79% of the S&P 500 companies that reported earnings have exceeded estimates. According to FactSet, about half of the S&P 500 companies have recorded their best performance relative to analyst expectations since the fourth quarter of 2021. Some analysts now expect first-quarter earnings for S&P 500 companies to decline 1.9% from a year ago, which is much better than the 5.1% drop expected at the start of April.

Several market sectors posted solid gains in April, while others closed the month lower. Consumer staples, health care, communication services, utilities, energy, and financials closed higher, while consumer discretionary, industrials, materials, information technology, and real estate ended lower.

Manufacturing activity rebounded from a moribund February, as it picked up some steam in March. Durable goods orders increased in March after falling in each of the previous two months. The purchasing managers’ index rose for the third straight month in March, but remained below 50.0, which indicates contraction. Services, on the other hand, expanded into positive territory, as the services PMI™ increased to 52.6 in March.

Inflationary indicators showed price pressures may be easing. Both the Consumer Price Index and the Personal Consumption Expenditures Price Index inched up 0.1% in March.

Bond prices edged higher in April, with yields dipping lower. Ten-year Treasury yields slipped 4 basis points from March. The 2-year Treasury yield ended the month at 4.00%. The dollar declined against a basket of world currencies. Gold prices ended April higher but slid below $2,000.00 per ounce where they spent much of the month.

Crude oil prices increased in April after falling in each of the previous five months. Oil prices have fallen due to an unusually warm winter in the United States and Europe. OPEC+ has indicated that it will cut production in the coming months, which may impact prices moving into the summer months. The retail price of regular gasoline was $3.656 per gallon on April 24, $0.235 higher than the price a month earlier but $0.451 lower than a year ago.

Stock Market Indexes

Market/Index	2022 Close	Prior Month	As of April 28	Monthly Change	YTD Change
DJIA	33,147.25	33,274.15	34,098.16	2.48%	2.87%
Nasdaq	10,466.48	12,221.91	12,226.58	0.04%	16.82%
S&P 500	3,839.50	4,109.31	4,169.48	1.46%	8.59%
Russell 2000	1,761.25	1,802.48	1,768.99	-1.86%	0.44%
Global Dow	3,702.71	3,919.85	3,984.56	1.65%	7.61%
Fed. Funds target rate	4.25%-4.50%	4.75%-5.00%	4.75%-5.00%	0 bps	50 bps
10-year Treasuries	3.87%	3.49%	3.45%	-4 bps	-42 bps
US Dollar-DXY	103.48	102.59	101.67	-0.90%	-1.75%
Crude Oil-CL=F	$80.41	$75.57	$76.73	1.54%	-4.58%
Gold-GC=F	$1,829.70	$1,987.80	$1,997.90	0.51%	9.19%

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: Job growth remained strong in March with the addition of 236,000 new jobs compared with an average monthly gain of 334,000 over the prior six months. In March, notable job gains occurred in leisure and hospitality, government, professional and business services, and health care. The unemployment rate edged down 0.1 percentage point to 3.5%. In March, the number of unemployed persons fell by 97,000 to 5.8 million. The employment-population ratio, at 60.4%, increased by 0.2 percentage point, while the labor force participation rate, at 62.6%, edged up 0.1 percentage point from the previous month. Both measures have shown little net change since early 2022. In March, average hourly earnings increased by $0.09 to $33.18. Over the past 12 months ended in March, average hourly earnings rose by 4.2%, lower than the 4.6% increase for the year ended in February. The average workweek decreased by 0.1 hour to 34.4 hours in March.
• There were 230,000 initial claims for unemployment insurance for the week ended April 22, 2023. The total number of workers receiving unemployment insurance was 1,858,000. By comparison, over the same period last year, there were 207,000 initial claims for unemployment insurance, and the total number of claims paid was 1,521,000.
• FOMC/interest rates: The Federal Open Market Committee did not meet in April. However, the Committee next meets during the first week of May, when it is expected the FOMC will raise interest rates by 25 basis points.
• GDP/budget:Rising interest rates and accelerating inflation are beginning to impact the U.S. economy. The gross domestic product increased 1.1% in the first quarter, according to the initial estimate from the Bureau of Economic Analysis. GDP rose 2.6% in the fourth quarter. The deceleration in first-quarter GDP compared to the previous quarter primarily reflected downturns in private inventory investment and nonresidential fixed investment. Personal consumption expenditures rose 3.7% in the first quarter compared to a 1.0% increase in the fourth quarter. Consumer spending on long-lasting durable goods jumped 16.9% in the first quarter after decreasing 1.3% in the prior quarter. Spending on services rose 2.3% (1.6% in the fourth quarter). Nonresidential fixed investment increased 0.7% after climbing 4.0% in the fourth quarter. Residential fixed investment fell 4.2% in the first quarter, significantly better than the 25.1% decrease in the fourth quarter. Exports increased 4.8% in the first quarter, following a decrease of 3.7% in the fourth quarter. Imports, which are a negative in the calculation of GDP, increased 2.9% in the first quarter after declining 5.5% in the previous quarter. Consumer spending, which accounted for about 70.0% of GDP, rose 1.0% in the fourth quarter compared to an increase of 2.3% in the third quarter. Consumer prices increased 4.2% in the first quarter compared to a 3.7% advance in the fourth quarter. Excluding food and energy, consumer prices advanced 4.9% in the first quarter (4.4% in the fourth quarter).
• March saw the federal budget deficit come in at $378.1 billion, $115.7 billion over the February deficit and $185.5 billion above the March 2022 deficit. The deficit for the first six months of fiscal year 2023, at $1.1 trillion, is $432.5 billion more than the first six months of the previous fiscal year. In March, government receipts totaled $313.2 billion and $2.0 trillion for the current fiscal year. Government outlays were $691.3 billion in March and $3.1 trillion through the first six months of fiscal year 2023. By comparison, receipts in March 2022 were $315.2 billion and $2.1 trillion through the first six months of the previous fiscal year. Expenditures were $507.8 billion in March 2022 and $2.8 trillion through the comparable period in FY22.
• Inflation/consumer spending: Inflationary pressures finally may be slowing. According to the latest Personal Income and Outlays report, the Personal Consumption Expenditures Price Index increased 0.1% in March and 4.2% since March 2022. Prices excluding food and energy also advanced 0.3%, following increases of 0.3% in February and 0.6% in January. Prices for goods fell 0.2%, while prices for services increased 0.2% in March. Prices for food dipped 0.2%, while energy prices slid 3.7%. Since March 2022, consumer prices for food increased 8.0% and energy prices declined 9.8%. Personal income rose 0.3% in March, the same increase as in the previous month. Disposable personal income increased 0.4% in March after advancing 0.5% in February. Consumer spending was flat in March after climbing 0.1% the previous month.
• The Consumer Price Index inched up 0.1% in March after increasing 0.4% in February. Over the 12 months ended in March, the CPI advanced 5.0%, down from 6.0% for the year ended in February. Excluding food and energy prices, the CPI rose 0.4% in March and 5.6% over the last 12 months. Prices for shelter, up 0.6%, were by far the largest contributor to the March CPI increase, which was more than offset by a 3.5% decline in energy prices. In March, food prices were flat, although they’re up 8.5% over the last 12 months. For the 12 months ended in March, energy prices decreased 6.4% and prices for shelter advanced 8.2%.
• Prices that producers receive for goods and services fell 0.5% in March, the largest monthly decline since April 2020. Producer prices increased 2.7% for the 12 months ended in March, the smallest 12-month increase since the period ended January 2021. In March, the Producer Price Index saw prices for both goods (-1.0%) and services (-0.3%) decrease. Producer prices less foods, energy, and trade services edged up 0.1% in March after increasing 0.2% in the previous month. Prices less foods, energy, and trade services advanced 3.6% for the year ended in March after increasing 4.5% from the 12 months ended in February.
• Housing: Sales of existing homes decreased 2.4% in March, with monthly sales declining in three of the four major U.S. regions, while sales were steady in the Northeast. Since March 2022, existing-home sales dropped 22.0%. According to the report from the National Association of Realtors®, a dearth of inventory, increasing home prices, and rising mortgage interest rates have contributed to the decline in sales of existing homes. The median existing-home price was $375,700 in March, 3.3% higher than the February price but 0.9% lower than the March 2022 price. Unsold inventory of existing homes represents a 2.6-month supply at the current sales pace, unchanged from the February pace. Sales of existing single-family homes dropped 2.7% in March and 21.1% from March 2022. The median existing single-family home price was $380,000 in March, up 3.2% from February but 1.4% lower than the March 2022 price.
• New single-family home sales advanced in March, climbing 9.6% and marking the fifth consecutive monthly increase. However, sales are down 3.4% from a year earlier. The median sales price of new single-family houses sold in March was $449,800 ($433,200 in February). The March average sales price was $562,400 ($501,800 in February). The inventory of new single-family homes for sale in March decreased to 7.6 months, down from 8.4 months in February.
• Manufacturing: Industrial production rose 0.4% in March after being flat in February. Manufacturing and mining each decreased 0.5% in March and were 1.1% below their respective year-earlier levels. Utilities, on the other hand, rose 8.4% in March, as the return to more seasonal weather after a mild February boosted the demand for heating. In March, total industrial production was 0.5% above its year-earlier level. The major market groups posted mixed results in March. Nondurable consumer goods, business supplies, and energy materials all recorded notable gains as a result of the jump in the output of utilities. Defense and space equipment posted the only other gain, increasing 0.8%. Construction supplies recorded the largest drop (-1.8%), followed by business equipment (-1.0%), durable consumer goods (-0.9%), and non-energy materials (-0.5%).
• March saw new orders for durable goods increase 3.2% after decreasing 1.2% and 5.0% in February and January, respectively. New orders for transportation equipment led the overall increase, advancing 9.1% in March after falling in each of the previous two months. Excluding transportation, new orders inched up 0.3% in March. Excluding defense, new orders increased 3.5%. Over the past 12 months, new orders for durable goods have increased 3.3%.
• Imports and exports: March saw both import and export prices edge lower. Import prices fell 0.6%, the largest one-month decline since November 2022. Import prices have not advanced since June 2022, with the exception of a 0.1% increase in December. Prices for U.S. imports declined 4.6% over the past year, the largest 12-month drop since the index declined 6.3% in May 2020. Import fuel prices decreased 2.9% in March and have not recorded a one-month advance since June 2022. Nonfuel import prices declined 0.5% in March after advancing 0.9% in each of the three previous months. Export prices fell 0.3% in March, the first one-month drop since December 2022. Lower prices in March for agricultural exports and nonagricultural exports each contributed to the overall decrease. Export prices decreased 4.8% for the year ended in March, the largest 12-month decline since a 6.7% drop from May 2019 to May 2020.
• The international trade in goods deficit narrowed more than expected in March, with exports outpacing imports. The trade in goods deficit decreased $7.4 billion, or 8.1%, from the February deficit. Exports of goods for March were $172.7 billion, $4.9 billion, or 2.9%, more than February exports. Imports of goods were $257.3 billion in March, $2.5 billion, or 1.0%, below February. The March increase in exports reflected gains in most major categories, including autos (4.3%), consumer goods (2.0%), and industrial supplies (6.4%). Foods, feeds, and beverages fell 4.5%. In March other goods (-3.3%), capital goods (-2.9%), and industrial supplies (-2.7%), contributed to the overall decline in imports of goods.
• 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 was $70.5 billion, an increase of 2.7% from the January deficit. February exports were $251.2 billion, 2.7% lower than January exports. February imports were $321.7 billion, 1.5% below January imports. For the 12 months ended in February, the goods and services deficit decreased 20.3%. Exports increased 10.8%, while imports increased 2.2%.
• International markets: The combined economic output of the 20 Eurozone countries rose 0.3% over the first quarter of 2023, following a 0.2% decline in the final quarter of last year. Europe’s economy has shown resilience, despite the ongoing war in Ukraine, inflation that is outpacing the European Central Bank’s 2.0% target, and rising interest rates. A mild winter and natural gas imports from the U.S. and other countries helped lower energy prices. China also enjoyed an economic rebound during the first quarter of the year. China’s economy expanded at an annualized rate of 4.5%, bolstered by China’s relaxing of Covid-related restrictions. For April, the STOXX Europe 600 Index increased 1.9%; the United Kingdom’s FTSE advanced 3.1%; Japan’s Nikkei 225 Index gained 2.9%; and China’s Shanghai Composite Index rose 1.5%.
• Consumer confidence: The Conference Board Consumer Confidence Index® decreased in April to 101.3, down from 104.0 in March. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, increased to 151.1 in April, up from 148.9 in the previous month. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, fell to 68.1 in April from 74.0 in March. According to the Conference Board’s report, the Expectations Index has remained below 80.0, the level associated with a recession within the next year, since February 2022.

Eye on the Month Ahead

The Federal Open Market Committee (FOMC) meets at the beginning of May. Most predict the Committee will raise interest rates by 25 basis points. The April job figures are released in early May. The job market has yet to show signs of cooling, although most predict job growth will wane this year, possibly beginning in April.

The Markets (as of market close April 28, 2023)

Stocks ended the week higher as strong corporate earnings data helped offset worries of another round of interest rate hikes, following the Federal Reserve’s meeting this week. Each of the benchmark indexes listed here posted weekly gains, with the exception of the Russell 2000. Ten-year Treasury yields slipped on rising bond prices. Crude oil prices ended the week lower, the dollar was flat, while gold prices advanced.

Investors were pensive at the start of last week, apparently waiting for a big week of corporate earnings before making a move. Monday saw technology, communications, and real estate lag, while health care, consumer staples, and utilities outperformed. Overall, the Dow and the Global Dow advanced 0.2%, the S&P 500 inched up 0.1%, while the Nasdaq and the Russell 2000 fell 0.3% and 0.2%, respectively. Ten-year Treasury yields dropped 5.5 basis points to close at 3.51%. Crude oil prices advanced 1.0% to about $78.66 per barrel. The dollar dipped about 0.5%, while gold prices rose 0.5%.

Stocks fell last Tuesday, pulled lower by downturns in financials, energy, technology, materials, and industrials. The Russell 2000 dropped 2.4%, followed by the Nasdaq (-2.0%), the S&P 500 (-1.6%), the Global Dow (-1.1%), and the Dow (-1.0%). Treasury bonds gained value, dragging yields lower, with the yield on 10-year Treasuries falling nearly 12.0 basis points to 3.39%. Crude oil prices fell to $77.09 per barrel amid concerns over weakening demand. The dollar and gold prices advanced.

Tech shares led the way last Wednesday on an otherwise lackluster day for stocks. Utilities, health care, industrials, energy, financials, and materials tumbled lower. Of the benchmark indexes listed here, only the Nasdaq closed higher, ending the session up 0.5%. The Russell 2000 led the declining indexes after giving up 0.9%, followed by the Dow (-0.7%), the S&P 500 (-0.4%), and the Global Dow (-0.4%). Bond prices slipped lower as yields increased, with 10-year Treasury yields closing at 3.42%. Crude oil prices continued to swoon, falling 3.5% to $74.39 per barrel. The dollar and gold prices declined.

Wall Street enjoyed a favorable day of trading last Thursday, with each of the benchmark indexes listed here posting impressive gains, led by the Nasdaq (2.4%), followed by the S&P 500 (2.0%), the Dow (1.6%), the Russell 2000 (1.2%), and the Global Dow (1.0%). All 11 market sectors of the S&P 500 rose, led by communications and consumer discretionary. Strong earnings from big tech companies helped fuel the rally. Ten-year Treasury yields rose 9.6 basis points to 3.52%. Crude oil reversed course, edging up 0.7% to $74.81 per barrel. The dollar was flat, while gold eked out a minimal gain.

Last Friday saw stocks close the session on an upswing. Each of the benchmark indexes listed here posted gains, led by the Russell 2000 (1.0%), followed by the large caps of the Dow and the S&P 500, which rose 0.8%. The Nasdaq climbed 0.7%, while the Global Dow rose 0.5%. Crude oil prices jumped 2.5% to $76.73 per barrel. Gold prices were flat, while the dollar inched higher. The yield on 10-year Treasuries fell 7.6 basis points, ending the session and the week at 3.45%

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 4/28	Weekly Change	YTD Change
DJIA	33,147.25	33,808.96	34,098.16	0.86%	2.87%
Nasdaq	10,466.48	12,072.46	12,226.58	1.28%	16.82%
S&P 500	3,839.50	4,133.52	4,169.48	0.87%	8.59%
Russell 2000	1,761.25	1,791.51	1,768.99	-1.26%	0.44%
Global Dow	3,702.71	3,981.52	3,984.56	0.08%	7.61%
Fed. Funds target rate	4.25%-4.50%	4.75%-5.00%	4.75%-5.00%	0 bps	50 bps
10-year Treasuries	3.87%	3.57%	3.45%	-12 bps	-42 bps
US Dollar-DXY	103.48	101.71	101.67	-0.04%	-1.75%
Crude Oil-CL=F	$80.41	$77.76	$76.73	-1.32%	-4.58%
Gold-GC=F	$1,829.70	$1,993.70	$1,997.90	0.21%	9.19%

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 initial estimate of first-quarter gross domestic product showed the economy accelerated at an annualized rate of 1.1%. Compared to the fourth quarter, when the GDP rose 2.6%, the deceleration in the first quarter GDP primarily reflected a downturn in private inventory investment and a slowdown in nonresidential (business) fixed investment. These movements were partly offset by an acceleration in consumer spending, an upturn in exports, and a smaller decrease in residential fixed investment. The Personal Consumption Expenditures Price Index, an indicator of inflation, increased 4.2% in the first quarter, an increase of 0.5 percentage point over the fourth quarter. Excluding food and energy prices, the PCE price index increased 4.9% in the first quarter, compared with an increase of 4.4% in the prior quarter. Personal consumption expenditures increased 3.7% in the first quarter after inching up 1.0% in the fourth quarter.
• Personal income increased in March, while consumer spending saw no change from the prior month. The latest information from the Bureau of Economic Analysis saw personal income climb 0.3% in March, the same increase as in February. Disposable personal income advanced 0.4% (0.5% in February). Personal consumption expenditures were unchanged in March from February. The closely watched Personal Consumption Expenditures Price Index inched up 0.1% in March, following a 0.3% increase in February. Prices excluding food and energy rose 0.3%. Spending on goods declined 0.6%, while services increased 0.4% in March. Over the last 12 months, consumer prices rose 4.2%, down from 5.1% for the 12 months ended in February.
• While sales of existing homes declined in March, sales of new single-family homes advanced for the fifth straight month. March saw sales of new single-family homes increase 9.6% from the previous month. However, sales were 3.4% below their year-earlier total. The median sales price of new houses sold in March 2023 was $449,800. The average sales price was $562,400. Inventory for new single-family homes available for sale in March sat at a 7.6-month supply at the current sales pace, down from 8.4 months in February.
• In March, new orders for durable goods increased 3.2%, following two consecutive monthly decreases. Excluding transportation, new orders advanced 0.3%. Excluding defense, new orders rose 3.5%. Transportation equipment led the overall increase in new orders, climbing 9.1% in March after decreasing in each of the prior two months.
• The advance report on international trade in goods revealed that the trade deficit declined $7.4 billion to $84.6 billion in March. Exports in March were $4.9 billion more than February exports, while imports were $2.5 billion less than February imports. The trade in goods deficit is $40.6 billion less than the March 2022 deficit. Over the last 12 months, exports have risen 2.7%, while imports have fallen 12.3%.
• The national average retail price for regular gasoline was $3.656 per gallon on April 12, $0.007 per gallon less than the prior week’s price and $0.451 less than a year ago. Also, as of April 24, the East Coast price increased $0.031 to $3.543 per gallon; the Gulf Coast price decreased $0.086 to $3.255 per gallon; the Midwest price fell $0.038 to $3.552 per gallon; the Rocky Mountain price increased $0.023 to $3.547 per gallon; and the West Coast price increased $0.023 to $4.548 per gallon.
• For the week ended April 22, there were 230,000 new claims for unemployment insurance, a decrease of 16,000 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 15 was 1.3%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended April 15 was 1,858,000, a decrease of 3,000 from the previous week’s level, which was revised down by 4,000. States and territories with the highest insured unemployment rates for the week ended April 8 were California (2.4%), New Jersey (2.4%), Massachusetts (2.1%), Minnesota (2.0%), Rhode Island (1.9%), Illinois (1.8%), New York (1.8%), Alaska (1.7%), Oregon (1.7%), Puerto Rico (1.6%), and Washington (1.6%). The largest increases in initial claims for unemployment insurance for the week ended April 15 were in New York (+6,600), Georgia (+3,245), Connecticut (+1,223), Rhode Island (+1,058), and South Carolina (+688), while the largest decreases were in California (-4,456), Texas (-2,801), Pennsylvania (-1,789), Indiana (-1,516), and Oregon (-1,202).

Eye on the Week Ahead

The Federal Open Market Committee meets this week, where the Committee is likely to announce a 25-basis point interest rate increase. The week closes with the release of the April jobs data. March saw 236,000 new jobs added, while average earnings rose 0.3%.

The Markets (as of market close April 21, 2023)

Stocks were relatively listless last week, with only the Russell 2000 posting a gain of 0.6%. The Nasdaq, the Dow, and the Global Dow fell between 0.2% and 0.4%, while the S&P 500 was nearly flat. Energy stocks were among the worst performing, with crude oil prices posting their poorest week in about a month. Gold prices slipped below $2,000.00 per ounce. The dollar edged higher, while 10-year Treasury yields climbed minimally. The start of corporate earnings season has been mixed at best, prompting investors to pause until this week when the initial estimate of first-quarter gross domestic product and the latest Personal Consumption Expenditures Price Index are released.

Wall Street opened last week on a positive note, pushed higher following a late-day market rally. The small caps of the Russell 2000 advanced 1.2% to lead the benchmark indexes listed here, with the Dow, the S&P 500, and the Nasdaq each gaining around 0.3%. The Global Dow broke even by the close of trading. Crude oil prices fell 1.9% to $80.98 per barrel on signs of waning demand. Ten-year Treasury yields added 6.9 basis points to close at 3.59%. The dollar rose higher, while gold prices slid 0.4% to $2,007.70 per ounce. Investors will be interested in corporate earnings season, which is picking up steam, with bank and financial earnings upcoming.

Stocks rode a roller coaster last Tuesday, ultimately ending the session about where they began. The S&P 500 (0.1%) and the Global Dow (0.5%) eked out gains, while the Russell 2000 fell 0.4%. The Dow and the Nasdaq ended the day flat. Crude oil prices dipped to $80.85 per barrel. Ten-year Treasury yields slipped to 3.57%. The dollar declined, while gold prices advanced. Throughout the day, investors tried to assess a mixed bag of bank earnings reports against hawkish comments from Federal Reserve officials that implied more interest-rate hikes.

Last Wednesday saw stocks close marginally lower, with only the Russell 2000 (0.2%) gaining ground among the benchmark indexes listed here. The Nasdaq and the S&P 500 were flat, while the Dow and the Global Dow slid 0.2%. Gold prices settled 0.6% lower, while the dollar edged higher. Crude oil prices declined to $78.99 per barrel, closing below the $80.00 per barrel mark for the first time since April 10. The yield on 10-year Treasuries inched up 3.0 basis points to 3.60%.

Disappointing corporate earnings sent stocks lower last Thursday as investors worried about a softening economy. The Nasdaq slid 0.8%, the S&P 500 and the Global Dow dropped -0.6%, the Russell 2000 fell 0.5%, and the Dow lost 0.3%. Bond prices rose, pulling yields lower, with 10-year Treasury yields falling to 3.54%. Crude oil prices declined for the fourth straight day, closing at about $77.29 per barrel. The dollar lost value, while gold prices increased nearly 0.5% to $2,017.20 per ounce.

Stocks edged higher last Friday to close out a generally disappointing week. None of the benchmark indexes listed here gained more than 0.1%, but only the Global Dow trended lower. Ten-year Treasury yields rose 2.5 basis points to close at 3.57%. Crude oil prices rose $0.40 per barrel. The dollar and gold prices slid lower.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 4/21	Weekly Change	YTD Change
DJIA	33,147.25	33,886.47	33,808.96	-0.23%	2.00%
Nasdaq	10,466.48	12,123.47	12,072.46	-0.42%	15.34%
S&P 500	3,839.50	4,137.64	4,133.52	-0.10%	7.66%
Russell 2000	1,761.25	1,781.16	1,791.51	0.58%	1.72%
Global Dow	3,702.71	3,994.13	3,981.52	-0.32%	7.53%
Fed. Funds target rate	4.25%-4.50%	4.75%-5.00%	4.75%-5.00%	0 bps	50 bps
10-year Treasuries	3.87%	3.52%	3.57%	5 bps	-30 bps
US Dollar-DXY	103.48	101.57	101.71	0.14%	-1.71%
Crude Oil-CL=F	$80.41	$82.64	$77.76	-5.91%	-3.30%
Gold-GC=F	$1,829.70	$2,019.10	$1,993.70	-1.26%	8.96%

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 number of building permits for residential construction declined 8.8% in March. Residential building permits are down 24.8% since March 2022. Single-family home permits rose 4.1% last month. Housing starts fell 0.8% in March and 17.2% from a year ago. Housing starts for single-family homes increased 2.7% in March. Housing completions dipped 0.6% in March, although single-family home completions advanced 2.4%. A limited supply of existing homes for sale has likely driven a rise in single-family construction.
• Existing home sales fell 2.4% in March and are down 22.0% since March 2022. Unsold inventory in March sat at a 2.6 month supply, unchanged from February. The median sales price for existing homes was $375,700 in March, up 3.3% from the previous month but 0.9% under the sales price from a year ago. Sales of existing single-family homes declined 2.7% in March and 21.1% from a year ago. Available inventory of single-family homes was at a 2.6-month supply, nearly the same as in February (2.5 months). The median sales price in March for existing single-family homes was $380,000, 3.2% higher than the February price, but 1.4% under the March 2022 price.
• The national average retail price for regular gasoline was $3.663 per gallon on April 17, $0.067 per gallon more than the prior week’s price but $0.403 less than a year ago. Also, as of April 17, the East Coast price increased $0.051 to $3.512 per gallon; the Gulf Coast price advanced $0.088 to $3.341 per gallon; the Midwest price rose $0.074 to $3.590 per gallon; the Rocky Mountain price increased $0.086 to $3.524 per gallon; and the West Coast price increased $0.068 to $4.525 per gallon.
• For the week ended April 15, there were 245,000 new claims for unemployment insurance, an increase 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 8 was 1.3%, an increase 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 8 was 1,865,000, an increase of 61,000 from the previous week’s level, which was revised down by 6,000. This is the highest level for insured unemployment since November 27, 2021. States and territories with the highest insured unemployment rates for the week ended April 1 were California (2.4%), New Jersey (2.4%), Massachusetts (2.2%), Minnesota (2.1%), Rhode Island (2.1%), Alaska (1.8%), Illinois (1.8%), New York (1.8%), Oregon (1.7%), and Puerto Rico (1.6%). The largest increases in initial claims for unemployment insurance for the week ended April 8 were in California (+10,640), New Jersey (+3,378), Texas (+2,981), Pennsylvania (+2,921), and Connecticut (+1,619), while the largest decreases were in Ohio (-3,138), Indiana (-926), Missouri (-552), Michigan (-516), and Georgia (-468).

Eye on the Week Ahead

There’s plenty of important economic data being released this week. The March report on new home sales kicks off the week. Sales of new, single-family homes rose 1.1% in February. New orders for durable goods dipped 1.0% in February after falling 5.0% in the previous month. The week closes with two very important reports. The advance estimate of gross domestic product for the first quarter is out. The economy accelerated at a rate of 2.6% for the fourth quarter. The week closes with the release of the report on personal income and outlays. While personal income increased 0.3% in February, consumer spending slowed from 1.8% in January to 0.2% in February, as consumers felt the pinch of rising prices. The Personal Consumption Expenditures Price Index, a measure of inflation, rose 0.3% in February after climbing 0.6% during the prior month. For the 12 months ended in February, the PCE price index climbed 5.0%, down from the January pace of 5.4%.

The Markets (as of market close April 14, 2023)

Investors spent much of last week contemplating the impact of the latest inflation data and the first batch of first-quarter bank earnings. The process of disinflation continued, and retail sales softened in March, which are developments that could influence interest-rate decisions to be made by the Federal Reserve in the coming months. The stock market closed out the week with gains across the board, despite a couple of rough patches. The Global Dow increased 1.6%, followed by the Russell 2000 (1.5%), the Dow (1.2%), the S&P 500 (0.8%), and the Nasdaq (0.3%). Ten-year Treasury yields moved up 24 basis points. The dollar weakened against a basket of currencies, oil prices dipped, and gold prices were little changed.

Last week began with stocks moving generally higher. The Russell 2000 (1.0%), the Dow (0.3%), and the S&P 500 (0.1%) gained ground, while the Nasdaq was flat. The Global Dow slipped 0.2% lower. The yield on 10-year Treasuries climbed 12.7 basis points to 3.41%. Crude oil dipped about 1.0% to $79.85 per barrel. The dollar gained nearly 1.0%, while gold prices fell by 1.0%. Investors remained cautious, possibly anticipating another interest-rate hike from the Federal Reserve, particularly following the previous week’s solid jobs report.

Stocks notched another low-volume trading session last Tuesday. Tech shares lagged for the second consecutive day. Large caps fared better, with the Dow up 0.3%. The S&P 500 ended the day where it began, while the small caps of the Russell 2000 rose 0.8%. The Global Dow gained 0.7%. Ten-year Treasury yields inched up 1.9 basis points to 3.43%. Crude oil prices advanced to $81.47 per barrel. The dollar slid lower, while gold prices gained to remain above $2,000.00 per ounce for the sixth straight session.

After trading higher for much of the day, stocks weren’t able to maintain that momentum, ultimately closing lower last Wednesday. A slowdown in the latest Consumer Price Index wasn’t enough to calm cautious investors. The minutes of the last meeting of the Federal Open Market Committee, released last Wednesday, revealed that Fed officials agreed that another rate hike was needed, despite concerns that raising interest rates may cause more financial stress, particularly in light of the recent failure of two regional banks. By the close of trading, only the Global Dow posted a gain (0.3%). Tech shares declined for the third straight session, dragging the Nasdaq down 0.9%. The Russell 2000 fell 0.7%, the S&P 500 slid 0.4%, and the Dow dipped 0.1%. The yield on 10-year Treasuries slipped marginally, closing at 3.42%. Crude oil prices rose 2.0% to $83.24 per barrel. Gold prices gained nearly 0.5%, while the dollar dipped 0.6%.

Wall Street bounced back last Thursday after the producer price index provided more evidence that inflation is continuing to ease. The Nasdaq led the increase, climbing 2.0%, followed by the Russell 2000 and the S&P 500, each rising 1.3%. The Dow (1.1%) and the Global Dow (0.8%) also closed higher. Communication services and consumer discretionary led the market sectors, both moving up 2.3%. Ten-year Treasury yields ticked up to 3.45%. The dollar slipped and gold prices advanced 1.5%. Crude oil prices dropped 1.1% to $82.32 per barrel.

On Friday, all of the stock indexes listed here ended the day in the red. The Russell 2000 lost 0.9%, followed by the Dow and the Nasdaq, which both fell 0.4%. The S&P 500 ticked down 0.2% and the Global Dow was flat. The yield on 10-year Treasuries rose 7.0 basis points to 3.52%. Crude oil prices and the dollar moved marginally higher, while gold prices retreated from Thursday’s near-record level.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 4/14	Weekly Change	YTD Change
DJIA	33,147.25	33,485.29	33,886.47	1.20%	2.23%
Nasdaq	10,466.48	12,087.96	12,123.47	0.29%	15.83%
S&P 500	3,839.50	4,105.02	4,137.64	0.79%	7.77%
Russell 2000	1,761.25	1,754.46	1,781.16	1.52%	1.13%
Global Dow	3,702.71	3,929.96	3,994.13	1.63%	7.87%
Fed. Funds target rate	4.25%-4.50%	4.75%-5.00%	4.75%-5.00%	0 bps	50 bps
10-year Treasuries	3.87%	3.28%	3.52%	24 bps	-35 bps
US Dollar-DXY	103.48	101.91	101.57	-0.33%	-1.85%
Crude Oil-CL=F	$80.41	$80.48	$82.64	2.68%	2.77%
Gold-GC=F	$1,829.70	$2,021.70	$2,019.10	-0.13%	10.35%

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 inched up 0.1% in March after advancing 0.4% in February, according to the latest Consumer Price Index. Over the last 12 months, the CPI has risen 5.0%, a decrease of 1.0% from the 12 months ended in February. This is the smallest 12-month increase since the 12 months ended in May 2021. As has been the case in prior months, prices for shelter (+0.6%) were by far the largest contributors to the monthly increase in the CPI. Those prices were more than offset by a decline in energy prices, which decreased 3.5%. Consumer prices less food and energy rose 0.4% in March after increasing 0.5% in February. In addition to prices for shelter, March also saw prices increase for motor vehicle insurance, airline fares, household furnishings and operations, and new vehicles. Prices for medical care and for used cars and trucks were among those that decreased over the month. While the March data is encouraging, it may not be enough to forestall another interest-rate hike when the Federal Open Market Committee next meets at the beginning of May.
• Producer prices declined 0.5% in March after being unchanged in February. The March decrease was the largest monthly drop since April 2020. For the 12 months ended in March, producer prices have increased 2.7%, the smallest 12-month increase since January 2021. Excluding food and energy, producer prices edged down 0.1% in March, however, when also excluding trade services, producer prices inched up 0.1%. Producer prices for goods decreased 1.0% in March, largely attributable to a 6.4% decline in energy prices, with gasoline prices falling 11.7%. Prices for food rose 0.6%. Prices for services declined 0.3%, while prices for trade services fell 0.9%.
• March saw inflationary pressures subside at the international trade level. Import prices decreased 0.6% last month, while export prices fell 0.3%. Lower prices for fuel and nonfuel imports each contributed to the March drop in U.S. import prices. Import prices declined 4.6% over the 12 months ended in March, and export prices declined 4.8%. Both of these year-over-year drops were the largest since May 2020.
• Retail sales fell 1.0% from the previous month in March but were up 2.9% since March 2022. Total sales for January 2023 through March 2023 were up 5.4% from the same period last year. Retail trade sales fell 1.2% from February but were up 1.5% year over year. Nonstore retailers were up 12.3% in March from the previous year, while food services and drinking places were up 13.0%.
• Industrial production rose 0.4% in March after increasing 0.9% and 0.2% in January and February, respectively. In March, manufacturing and mining output each fell 0.5%. The index for utilities jumped 8.4%, as the return to more seasonal weather after a mild February boosted the demand for heating. Total industrial production in March was 0.5% higher than a year earlier.
• The monthly government deficit expanded by $115.6 billion in March over the previous month, and $185.4 billion over the March 2022 deficit. For the current fiscal year, the government deficit sits at $1,100.7 trillion, $432.5 billion higher than the deficit over the comparable period in the previous fiscal year. In March, government receipts increased by $51.1 billion over February receipts, while expenditures rose by $166.8 billion.
• The national average retail price for regular gasoline was $3.596 per gallon on April 10, $0.099 per gallon more than the prior week’s price but $0.495 less than a year ago. Also, as of April 10, the East Coast price increased $0.104 to $3.461 per gallon; the Gulf Coast price advanced $0.105 to $3.253 per gallon; the Midwest price rose $0.127 to $3.516 per gallon; the Rocky Mountain price decreased $0.027 to $3.438 per gallon; and the West Coast price increased $0.061 to $4.457 per gallon. The U.S. Energy Information Administration forecasts that regular retail gas prices in the U.S. will average $3.49 per gallon during this summer (April through September). Household expenditures on gasoline are consistently the most expensive category of household spending directly related to energy. In 2021, the most recent year data was available in the U.S., the Bureau of Labor Statistics’ Consumer Expenditure Survey indicated that average annual household spending on gasoline totaled $2,148 — slightly more than electricity, natural gas, and fuel oil combined.
• For the week ended April 8, there were 239,000 new claims for unemployment insurance, an increase of 11,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended April 1 was 1.2%, 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 1 was 1,810,000, a decrease of 13,000 from the previous week’s level. States and territories with the highest insured unemployment rates for the week ended March 25 were New Jersey (2.5%), California (2.3%), Massachusetts (2.3%), Rhode Island (2.2%), Minnesota (2.1%), Illinois (1.9%), New York (1.9%), Alaska (1.8%), Puerto Rico (1.8%), Connecticut (1.7%), Montana (1.7%), and Oregon (1.7%). The largest increases in initial claims for unemployment insurance for the week ended April 1 were in Indiana (+4,457), Illinois (+1,933), Massachusetts (+1,216), Oregon (+1,052), and South Carolina (+211), while the largest decreases were in California (-6,833), Kentucky (-3,907), Michigan (-3,281), Ohio (-2,494), and New York (-1,711).

Eye on the Week Ahead

We begin to get the latest data on the housing sector this week with the release of reports on housing starts and existing-home sales. Sales of existing homes soared in February, climbing over 14.0% from the previous month’s total. However, sales remained 22.6% under their February 2022 pace. Issued building permits and housing starts rose notably in February, a good sign for new-home construction heading into the spring.

The Markets (as of market close April 7, 2023)

Last week, most financial markets closed for Good Friday, although bond markets were open until noon. Stocks ended last week with mixed results, with the Dow and the Global Dow adding value, while the Russell 2000, the Nasdaq, and the S&P 500 fell. Wall Street began the week with large caps advancing. However, stocks couldn’t recover from mid-week downturns, despite a strong finish last Thursday. For the most part, investors were apparently cautious ahead of the jobs report, which came out last Friday. Economic news was mixed, with a rise in the services sector offset by another tumble in manufacturing. The number of jobless claims rose, while the number of job openings declined to their lowest level in nearly two years. Bond prices increased, driving yields lower. Crude oil prices advanced for the third straight week and are now back to where they began the year. Gold prices rose past $2,000.00 per ounce after advancing for the second week in a row. The dollar slipped lower.

Last Monday was a mixed bag for stocks, with the Dow (1.0%), the Global Dow (0.6%), and the S&P 500 (0.4%) advancing, while the Nasdaq (-0.3%) and the Russell 2000 (0.0%) were unable to gain ground. Bond prices jumped higher, dragging yields lower, with 10-year Treasury yields falling to 3.43%. Crude oil prices surged, climbing 6.4% to hit $80.48 per barrel after OPEC+ announced an unexpected cut in production starting in May. The dollar dipped minimally, while gold prices rose to over $2,000.00 per ounce. The rise in oil prices helped drive the energy sector up by nearly 5.0%. Health care, materials, consumer staples, and communication services also advanced. Consumer discretionary, real estate, and utilities slid the furthest. Information technology lost less than 0.1%.

Stocks and bond yields tumbled lower last Tuesday, while the dollar fell to a two-month low. Crude oil prices were flat. Gold prices rose nearly 2.0%. The JOLTS report (see below) showed job openings fell to their lowest level in almost two years, an indication that employment and the economy may be slowing. Each of the benchmark indexes listed here lost value, with the small caps of the Russell 2000 losing 1.8%. The Nasdaq, the Dow, and the S&P 500 each declined nearly 0.6%. The Global Dow dipped 0.1%. Ten-year Treasury yields ended the session at 3.33% after falling 9.3 basis points.

Last Wednesday saw only the Dow advance in value among the benchmark indexes listed here. The remaining indexes fell for the third straight session, with the Nasdaq slipping 1.1%, followed by the Russell 2000 (-1.0%), the S&P 500 (-0.8%), and the Global Dow (-0.4%). Ten-year Treasury yields also fell for the third consecutive day, declining 5.0 basis points to 3.28%, the lowest rate so far this year. Crude oil prices dipped lower to $80.36 per barrel. The dollar advanced, while gold prices fell marginally.

Stocks rebounded last Thursday, as investors likely took advantage of some perceived value following losses during the previous two sessions. The Nasdaq gained 0.8%, followed by the S&P 500 (0.4%) and the Russell 2000 (0.1%). The Dow and the Global Dow ended the day flat. Ten-year Treasury yields also ended the session about where they started, closing the day at 3.28%. Crude oil prices slipped to $80.48 per barrel. The dollar eked out a minimal gain, while gold prices dipped 0.7% but remained above $2,000.00 per ounce.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 4/7	Weekly Change	YTD Change
DJIA	33,147.25	33,274.15	33,485.29	0.63%	1.02%
Nasdaq	10,466.48	12,221.91	12,087.96	-1.10%	15.49%
S&P 500	3,839.50	4,109.31	4,105.02	-0.10%	6.92%
Russell 2000	1,761.25	1,802.48	1,754.46	-2.66%	-0.39%
Global Dow	3,702.71	3,919.85	3,929.96	0.26%	6.14%
Fed. Funds target rate	4.25%-4.50%	4.75%-5.00%	4.75%-5.00%	0 bps	50 bps
10-year Treasuries	3.87%	3.49%	3.28%	-21 bps	-59 bps
US Dollar-DXY	103.48	102.59	101.91	-0.66%	-1.52%
Crude Oil-CL=F	$80.41	$75.57	$80.48	6.50%	0.09%
Gold-GC=F	$1,829.70	$1,987.80	$2,021.70	1.71%	10.49%

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

• There were 236,000 new jobs added in March compared with the average monthly gain of 334,000 over the prior six months. The change in employment for January and February was revised, such that the combined total for those months was 17,000 lower than previously reported. In March, notable job gains occurred in leisure and hospitality, government, professional and business services, and health care. The unemployment rate dipped 0.1 percentage point to 3.5%. The labor force participation rate inched up 0.1 percentage point to 62.6%, while the employment-population ratio rose 0.2 percentage point to 60.4%. The number of unemployed persons, at 5.8 million, decreased by 97,000. In March, average hourly earnings rose by $0.09, or 0.3%, to $33.18. Over the past 12 months, average hourly earnings have increased by 4.2%, the lowest year-over-year rise since June 2021. The average workweek edged down by 0.1 hour to 34.4 hours in March. Overall, the first quarter of 2023 has shown that the pace of hiring has trended lower and annual wage growth has slowed, which could be evidence of a slowdown in the employment sector.
• According to the latest Job Openings and Labor Turnover report, the number of job openings decreased 632,000 to 9.9 million in February, the lowest since May 2021. Several sectors saw a decrease in the number of job openings, including professional and business services, health care and social assistance, and transportation, warehousing, and utilities. The number of hires fell 164,000, while the number of separations dipped 80,000. Within separations, the number of quits rose by 146,000, while the number of layoffs and discharges declined 215,000. Overall, this data suggests that the labor market may be cooling.
• The March survey from purchasing managers showed that activity in the manufacturing sector advanced marginally from February. The S&P Global US Manufacturing Purchasing Managers’ Index posted 49.2 in March, up from 47.3 in February, rising for the third consecutive month, but still in contraction (readings of 50.0 or higher indicate growth). While manufacturing output increased in March, new orders fell, with survey respondents indicating that higher interest rates and inflationary pressures continued to strain customer purchasing power.
• Purchasing managers reported an increase in new business in March that helped drive a rise in overall output. According to the S&P Global, the services PMI™ rose to 52.6 in March, up from 50.6 in February, marking the sharpest increase since June 2022. In addition to an increase in demand, costs rose at the second-slowest pace since October 2020. Nevertheless, efforts to pass through higher costs to clients resulted in a steep and accelerated increase in selling prices.
• According to the Bureau of Economic Analysis, the goods and services trade deficit increased $1.9 billion in February from the previous month. Exports fell $6.9 billion, while imports declined $5.0 billion. Year to date, the goods and services deficit decreased 20.3% from the same period in 2022. Exports increased 10.8%, while imports rose 2.2%. Relative to trade in goods with select countries, the deficit with China increased $3.2 billion to $25.2 billion in February, which is the largest trade in goods deficit between the U.S. and a foreign trade partner. The next highest deficit is with the European Union at $18.1 billion. The largest trade in goods surplus is with South and Central America ($4.7 billion), followed by Hong Kong ($2.5 billion).
• The national average retail price for regular gasoline was $3.497 per gallon on April 3, $0.076 per gallon more than the prior week’s price but $0.673 less than a year ago. Also, as of April 3, the East Coast price increased $0.060 to $3.357 per gallon; the Gulf Coast price increased $0.066 to $3.148 per gallon; the Midwest price rose $0.148 to $3.389 per gallon; the Rocky Mountain price decreased $0.072 to $3.465 per gallon; and the West Coast price advanced $0.018 to $4.396 per gallon.
• For the week ended April 1, there were 228,000 new claims for unemployment insurance, a decrease of 18,000 from the previous week’s level, which was revised up by 48,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended March 25 was 1.3%, unchanged from the previous week’s rate, which was revised up by 0.1 percentage point. The advance number of those receiving unemployment insurance benefits during the week ended March 25 was 1,823,000, an increase of 6,000 from the previous week’s level, which was revised up by 128,000. This is the highest level for insured unemployment since December 11, 2021. It is important to note that the data for both initial claims and continuing claims reflects a change in the methodology used to calculate this data. States and territories with the highest insured unemployment rates for the week ended March 18 were New Jersey (2.6%), California (2.4%), Rhode Island (2.4%), Massachusetts (2.3%), Minnesota (2.2%), Alaska (1.9%), Illinois (1.9%), New York (1.9%), and Montana (1.8%). The largest increases in initial claims for unemployment insurance for the week ended March 25 were in Michigan (+4,536), Massachusetts (+2,733), California (+1,953), Texas (+1,810), and New York (+1,646), while the largest decreases were in Indiana (-2,559), Connecticut (-897), Tennessee (-663), Mississippi (-626), and Iowa (-615).

Eye on the Week Ahead

Inflation data for March is out this week with the release of several important reports. The Consumer Price Index, an inflation indicator that is familiar to most, is released this Wednesday. The CPI rose 0.4% in February, while core prices increased 0.5%. The Producer Price Index for March is also out this week. Prices at the producer level actually dipped 0.1% in February, although producer prices remain up 4.6% from a year earlier. The March figures on import and export prices are scheduled for release on Friday. Import prices fell 0.1% in February, while export prices rose 0.2%.

The Markets (first quarter through March 31, 2023)

Wall Street proved resilient during the first quarter of the year, despite rising inflation, uncertainty about the Federal Reserve’s actions, interest-rate hikes, and banking concerns. Inflationary data in January seemed to show inflation may have peaked, and the Fed would scale back its interest-rate hikes, if not cut them. However, subsequent inflation data showed prices ramped up again. Stocks and bond prices dipped as investors responded to concerns that interest rates would continue to rise and for a longer period of time. In addition to the impact of rising inflation, two major banks collapsed in March, sending bank stocks lower. Credit Suisse Group, nearing failure, was taken over by rival UBS Group, while several U.S. banks provided funds to keep First Republic Bank afloat. The economic recession that has been predicted has yet to come to fruition. The labor market remained strong, and while inflation continued to rise, the two primary indicators, the Consumer Price Index and the Personal Consumption Expenditures Price Index, showed prices slowed on an annual basis.

Despite all of this apparent turmoil, coupled with the ongoing war in Ukraine, stocks regained their footing and ended the quarter on the plus side. The tech-heavy Nasdaq led the benchmark indexes, followed by the S&P 500, the Global Dow, the Russell 2000, and the Dow. Investors poured money back into Mega cap Tech shares, driving them higher during the first quarter of 2023 after an underperforming 2022. Those gains helped drive the Nasdaq and the S&P 500 higher. Even with investors taking some gains from the Mega caps, other market sectors reaped the benefits. Energy stocks, which excelled in 2022, fell in the first quarter of 2023, as did crude oil prices. Gas prices rose minimally higher, with regular retail prices averaging $3.421 per gallon on March 27, $0.14 over prices on January 4. The dollar dipped lower, while gold prices rose higher.

The quarter kicked off with stocks enjoying their best January performance since 2019, as inflation data suggested that inflation may have peaked, raising hopes that the Federal Reserve would scale back interest-rate hikes and temper fears of an economic recession. Nevertheless, Federal Reserve Chair Jerome Powell cautioned that the battle against rising inflation was far from over and additional rate hikes were upcoming. In fact, the Federal Reserve hiked interest rates 25.0 basis points on the last day of the month. Growth stocks performed best, with Mega caps making solid gains. Consumer discretionary, communication, and tech sectors performed well, while defensive sectors, such as utilities, health care, and consumer staples, dipped lower. Bond prices advanced, pulling yields lower. While 260,000 new jobs were added in December, the growth was the slowest in two years. Average hourly earnings rose to the lowest annual level (4.6%) since September 2021. However, manufacturing declined at the fastest rate since May 2020, while services retracted for the third month running, according to the S&P Global Manufacturing PMI™. Nevertheless, each of the benchmark indexes listed here added value, led by the Nasdaq (10.7%), followed by the Russell 2000 (9.7%), the Global Dow (7.8%), the S&P 500 (6.2%), and the Dow (2.8%). Ten-year Treasury yields fell 35.0 basis points, crude oil prices dipped 1.7%, the dollar slid 1.4%, but gold prices advanced 6.3%.

Stocks gave up some of their January gains in February, with each of the benchmark indexes losing value. The Dow (-4.2%) fell the furthest, followed by the Global Dow (-2.7%), the S&P 500 (-2.6%), the Russell 2000 (1.8%), and the Nasdaq (-1.1%). Bond prices declined, driving yields higher, with 10-year Treasury yields advancing 39 basis points. Crude oil prices decreased 2.8% to $76.86 per barrel. The dollar rose 2.8% against a basket of currencies. Gold prices lost most of their January gains, falling 5.7% in February. Consumer prices advanced, with core prices (excluding food and energy prices) climbing 0.6%, the biggest advance since August. Over 500,000 new jobs were added nearly three times the consensus estimates and the largest increase in six months. The unemployment rate slid to 3.4%, its lowest level since 1969. Consumer spending rose 1.8%, the most in nearly two years.

March was a very choppy month for market returns. Despite an apparent banking crisis, investors stayed the course for the most part, driving stocks mostly higher. The Nasdaq and the S&P 500 led the gainers of the benchmark indexes listed here. Several sectors outperformed, including information technology, communication services, and utilities, while financials fell notably on the heels of the aforementioned bank failures. Manufacturing retracted, while services advanced, according to purchasing managers surveyed. Labor remained strong, with 311,000 new jobs added. Hourly earnings rose by $0.08 for the month and 4.6% since February 2022. The Consumer Price Index rose 0.4% after falling 0.5% the previous month. The PCE price index increased 0.3% and 5.0% over the past 12 months. The economy advanced at an annualized rate of 2.6% in the fourth quarter, short of the 3.2% increase in the third quarter. Crude oil prices and the dollar declined, while gold prices climbed higher.

Stock Market Indexes

Market/Index	2022 Close	As of March 31	Monthly Change	Quarterly Change	YTD Change
DJIA	33,147.25	33,274.15	1.89%	0.38%	0.38%
Nasdaq	10,466.48	12,221.91	6.69%	16.77%	16.77%
S&P 500	3,839.50	4,109.31	3.51%	7.03%	7.03%
Russell 2000	1,761.25	1,802.48	-4.98%	2.34%	2.34%
Global Dow	3,702.71	3,919.85	0.99%	5.86%	5.86%
Fed. Funds target rate	4.25%-4.50%	4.75%-5.00%	25 bps	50 bps	50 bps
10-year Treasuries	3.87%	3.49%	-42 bps	-38 bps	-38 bps
US Dollar-DXY	103.48	102.59	-2.25%	-0.86%	-0.86%
Crude Oil-CL=F	$80.41	$75.57	-1.68%	-6.02%	-6.02%
Gold-GC=F	$1,829.70	$1,987.80	8.37%	8.64%	8.64%

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: Job growth remained strong in February with the addition of 311,000 new jobs, compared with an average monthly gain of 343,000 over the prior six months. Despite federal interest-rate hikes aimed at slowing the economy and inflation, there is little evidence that the supply of labor is peaking. In February, notable job gains occurred in retail trade, government, leisure and hospitality, and health care. Employment declined in information and in transportation and warehousing. The unemployment rate edged up 0.2 percentage point to 3.6%. in February, the number of unemployed persons rose by 242,000 to 5.9 million. The employment-population ratio, at 60.2%, was unchanged in February, while the labor force participation rate, at 62.5%, edged up 0.1 percentage point from the previous month. Both measures have shown little net change since early 2022. In February, average hourly earnings increased by $0.08 to $33.09. Over the past 12 months ended in February, average hourly earnings rose by 4.6%. The average workweek decreased by 0.1 hour to 34.5 hours in February.
• There were 191,000 initial claims for unemployment insurance for the week ended March 25, 2023. The total number of workers receiving unemployment insurance was 1,689,000. By comparison, over the same period last year, there were 171,000 initial claims for unemployment insurance, and the total number of claims paid was 1,506,000.
• FOMC/interest rates: The Federal Open Market Committee met March 21-22, at which time the Committee increased the Federal Funds target rate range by 25 basis points to 4.75%-5.00%. The statement from the FOMC indicated that it is “strongly committed to returning inflation to its 2.0% objective.” The Committee also noted that it would consider adjusting its policy stance based on “labor market conditions, inflation pressures and inflation expectations, and financial and international developments.”
• GDP/budget: Despite rising interest rates and accelerating inflation, the U.S. economy advanced in the fourth quarter of 2022. The economy, as measured by gross domestic product, accelerated at an annual rate of 2.6% in the fourth quarter of 2022, according to the third and final estimate from the Bureau of Economic Analysis. GDP increased 3.2% in the third quarter after falling in the first and second quarters, 1.6% and 0.6%, respectively. The deceleration in fourth-quarter GDP compared to the previous quarter primarily reflected a downturn in exports and decelerations in consumer spending, nonresidential fixed investment, and state and local government spending. These movements were partly offset by an upturn in private inventory investment, a smaller decrease in residential fixed investment, and an acceleration in federal government spending. Imports, which are a negative in the calculation of GDP, decreased less in the fourth quarter than in the third quarter. Consumer spending, which accounted for about 70.0% of GDP, rose 1.0% in the fourth quarter compared to an increase of 2.3% in the third quarter. Consumer prices increased 3.7% in the fourth quarter (4.3% in the third quarter). Excluding food and energy, consumer prices advanced 4.4% in the fourth quarter (4.7% in the third quarter). In 2022, consumer prices increased 6.3%, compared with an increase of 4.0% in 2021. Overall, In GDP increased 2.1% in 2022, compared with an increase of 5.9% in 2021.
• February saw the federal budget deficit come in at $262.4 billion, $223.6 billion over the January deficit and $45.8 billion above the February 2022 deficit. The deficit for the first five months of fiscal year 2023, at $722.6 billion, is $247.0 billion more than the first five months of the previous fiscal year. In February, government receipts totaled $262.1 billion and $1,735.0 trillion for the current fiscal year. Government outlays were $524.5 billion in February and $2,457.6 trillion through the first five months of fiscal year 2023. By comparison, receipts in February 2022 were $289.9 billion and $1,806.8 trillion through the first five months of the previous fiscal year. Expenditures were $506.4 billion in February 2022 and $2,282.4 trillion through the comparable period in FY22.
• Inflation/consumer spending: Inflationary pressures continued to mount in February. According to the latest Personal Income and Outlays report, the Personal Consumption Expenditures Price Index increased 0.3% in February and 5.0% since February 2022. Prices excluding food and energy also advanced 0.3%, following increases of 0.5% in January and 0.4% in December. Prices for goods rose 0.2%, while prices for services increased 0.3% in February, with prices for food rising 0.2%, although prices for energy fell 0.4%. Since February 2022, consumer prices for food increased 9.7% and energy prices rose 5.1%. Personal income rose 0.3% in February, while disposable personal income increased 0.5%. Consumer spending rose 0.2% in February after climbing 2.0% the previous month.
• The Consumer Price Index rose 0.4% in February after increasing 0.5% in January. Over the 12 months ended in February, the CPI advanced 6.0%, down from 6.4% for the year ended in January. Excluding food and energy prices, the CPI rose 0.5% in February and 5.5% over the last 12 months. Prices for shelter, up 0.8%, were by far the largest contributor to the February CPI increase, accounting for nearly 70.0% of the overall advance. In February, food prices rose 0.4%, while energy prices decreased 0.6%. For the 12 months ended in February, energy prices increased 5.2%, food prices rose 9.5%, and prices for shelter advanced 8.1%.
• Prices that producers receive for goods and services fell 0.1% in February after advancing 0.3% (revised) in January. Producer prices increased 4.6% for the 12 months ended in February after rising 5.7% (revised) for the 12 months ended in January. In February, the PPI index saw prices for both goods (-0.2%) and services (-0.1%) decrease. Producer prices less foods, energy, and trade services rose 0.2% in February after increasing 0.5% in the previous month. Prices less foods, energy, and trade services advanced 4.4% for the year ended in February, unchanged from the 12 months ended in January.
• Housing: Sales of existing homes increased for the first time in thirteen months after vaulting 14.5% in February. Despite the increase, existing-home sales dropped 22.6% from February 2022. According to the report from the National Association of Realtors®, home buyers took advantage of any interest rate declines, while some areas of the country saw gains where home prices declined. The median existing-home price was $363,000 in February, higher than the January price of $361,200 but slightly lower than the February 2022 price of $363,700. Unsold inventory of existing homes represents a 2.6-month supply at the current sales pace, marginally lower than the January supply of 2.9 months. Sales of existing single-family homes rose 15.3% in February but were down 21.4% from February 2022. The median existing single-family home price was $367,500 in February, up from $365,400 in January but lower than the February 2022 price of $370,000.
• New single-family home sales advanced in February, climbing 1.1% and marking the fourth consecutive monthly increase. However, sales are down 19.0% from February 2022. The median sales price of new single-family houses sold in February was $438,200 ($426,500 in January). The February average sales price was $498,700 ($479,800 in January). The inventory of new single-family homes for sale in February represented a supply of 8.2 months at the current sales pace, down marginally from the January estimate of 8.3 months.
• Manufacturing: Industrial production was unchanged in February, following a 0.3% increase in January and a 1.4% drop in December. Manufacturing increased 0.1% in February (1.3% in January) but was 1.0% below its year-earlier level. Mining decreased 0.6%. Utilities, on the other hand, rose 0.5% over the 12 months ended in February, total industrial production was 0.2% below its year-earlier level.
• February saw new orders for durable goods decrease 1.0% after increasing 5.0% in January. Durable goods orders have declined two of the last three months with the January decrease. Excluding transportation, new orders were virtually unchanged. Excluding defense, new orders decreased 0.5%. Transportation equipment, also down three of the last four months, drove the decrease, falling 2.8%.
• Imports and exports: February saw import prices edge down 0.1%, following a 0.4% decline in January. Import prices have not advanced since June 2022, with the exception of a 0.1% increase in December. Prices for U.S. imports declined 1.1% over the past year, the first 12-month decrease since December 2020, and the largest year-over-year drop since September 2020. Import fuel prices decreased 4.9% in February for the second consecutive month. Those are the largest monthly drops since September 2022, and import fuel prices have not risen on a one-month basis since June 2022. Nonfuel import prices climbed 0.4% in February after advancing 0.2% in January. Nonfuel import prices advanced 0.2% from February 2022. Export prices rose 0.2% in February, after rising 0.5% in January. Those are the first monthly increases in export prices since June 2022. Despite the advance, exports declined 0.8% over the past 12 months, the first year-over-year decrease since the period ended November 2020.
• Trade activity weakened in February. The international trade in goods deficit was $91.6 billion in February, up $0.5 billion, or 0.6%, from January. Exports of goods for February were $167.8 billion, $6.7 billion, or 3.8%, less than January exports. Imports of goods were $259.5 billion in February, $6.2 billion, or 2.3%, below December. The February decrease in exports reflected declines in most major categories, with autos falling 11.9% and consumer goods down 4.6%. In February, auto imports were down 7.1%, while imports of consumer goods contracted 5.6%.
• 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 was $68.3 billion, an increase of 1.6% from the December deficit. January exports were $257.5 billion, 3.4% higher than December exports. January imports were $325.8 billion, 3.0% more than December imports. For the 12 months ended in January, the goods and services deficit decreased 21.9%. Exports increased 13.3%, while imports increased 3.5%.
• International markets: The battle against rising inflation remained at the forefront for most of the world’s economies. Core inflation (excluding food and energy prices) hit a record high in the eurozone for March. The European Central Bank hiked interest rates 50.0 basis points and will likely call for a similar rate increase in May. The Bank of England added 25.0 basis points to its target interest rate after inflation in February (10.4% annual increase) exceeded the bank’s expectations. On the other hand, inflation in Canada eased in February, falling 0.7 percentage point to an annual rate of 5.2%. Likewise, Japan’s Consumer Price Index fell a full percentage point to 3.3% in February, bolstered by government subsidies for electricity and natural gas. However, food prices continued to rise. For March, the STOXX Europe 600 Index lost 1.4%; the United Kingdom’s FTSE dropped 3.9%; Japan’s Nikkei 225 Index gained 0.4%; and China’s Shanghai Composite Index fell 1.7%.
• Consumer confidence: The Conference Board Consumer Confidence Index® increased in March to 104.2, up from 103.4 in February. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, decreased to 151.1 in March, down from 153.0 in the previous month. The Expectations Index — based on consumers’ short-term outlook for income, business, and labor market conditions — ticked up to 73.0 in March from 70.4 in February. According to the Conference Board’s report, an Expectations Index reading below 80.0 could signal a recession within the next year. It has been below this level for 12 of the past 13 months.

Eye on the Quarter Ahead

The second quarter is likely to see interest rates continue to be pushed higher by the Federal Reserve. However, rate hikes may be smaller, with the possibility of a reduction in the number of increases. The labor sector should remain solid, although job gains may wane some. Industrial production may actually show some gains, while the services sector is more likely to strengthen.

The Markets (as of market close March 31, 2023)

Equities closed the week and month higher. Stocks posted gains in four of the five sessions last week, with the Global Dow and the Russell 2000 leading the way. The Nasdaq enjoyed robust weekly returns as it has for most of 2023. Investors’ fears of a banking crisis apparently subsided but not enough to prevent the financial sector from enduring its worst month since June. Consumer prices continued to advance, according to the latest Personal Consumption Expenditures Price Index (see below) but not as much as estimated. Ten-year Treasury yields increased, despite falling lower at the end of the week. Crude oil prices rose and the dollar slid, while gold prices ended last week higher.

Stocks began last week closing mostly higher, with only the Nasdaq ending the session in the red. The large caps of the S&P 500 led the benchmark indexes listed here, gaining 1.2%, followed by the Russell 2000 (1.1%), the Global Dow (0.7%), and the Dow (0.6%). Ten-year Treasury yields added 14.8 basis points to close at 3.52%. Crude oil prices rose 5.4% to $72.99 per barrel. The dollar and gold prices declined.

Investors moved from stocks last Tuesday, sending the benchmark indexes listed here lower. In what was another choppy day of trading, the Nasdaq ended the session down 0.5%, followed by the S&P 500 (-0.2%), the Dow and the Russell 2000 (-0.1%). The Global Dow closed up 0.8%. The yield on 10-year Treasuries closed at 3.56% after adding 3.6 basis points. Gold prices rose 0.1%. Crude oil prices rose 0.7% to $73.68 per barrel. The dollar dipped 0.4%.

Stocks surged last Wednesday, with each of the benchmark indexes listed here posting gains. The Nasdaq (1.7%), and the S&P 500 (1.4%) led the charge, followed by the Global Dow (1.2%), the Russell 2000 (1.1%), and the Dow (1.0%). Ten-year Treasury yields were flat, closing at 3.56%. Crude oil prices slid 0.4% to close at $72.89. The dollar advanced, while gold prices declined.

Wall Street enjoyed another round of solid gains last Thursday. The Global Dow climbed 0.9% to lead the benchmark indexes, followed by the Nasdaq (0.7%), the S&P 500 (0.6%), and the Dow (0.4%). The small caps of the Russell 2000 slid marginally lower, falling 0.2%. Ten-year Treasury yields dipped to 3.55%. The dollar dropped, while gold prices advanced, as prices neared $2,000.00 per ounce. Crude oil prices rose nearing 2.0% to $74.38 per barrel.

Stocks continued to advance last Friday, with each of the benchmark indexes ending the session higher. The Russell 2000 led the gainers, climbing about 1.9%. The Nasdaq advanced 1.7%, the S&P 500 added 1.4%, the Dow gained 1.3%, and the Global Dow rose 0.8%. Bond prices also advanced, with the yield on 10-year Treasuries falling 5.7 basis points to close at 3.49%. Crude oil prices gained for the second straight day after climbing nearly 1.6%. The dollar advanced, while gold prices slid lower.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 3/31	Weekly Change	YTD Change
DJIA	33,147.25	32,237.53	33,274.15	3.22%	0.38%
Nasdaq	10,466.48	11,823.96	12,221.91	3.37%	16.77%
S&P 500	3,839.50	3,970.99	4,109.31	3.48%	7.03%
Russell 2000	1,761.25	1,734.92	1,802.48	3.89%	2.34%
Global Dow	3,702.71	3,757.54	3,919.85	4.32%	5.86%
Fed. Funds target rate	4.25%-4.50%	4.75%-5.00%	4.75%-5.00%	0 bps	50 bps
10-year Treasuries	3.87%	3.38%	3.49%	11 bps	-38 bps
US Dollar-DXY	103.48	103.11	102.59	-0.50%	-0.86%
Crude Oil-CL=F	$80.41	$69.20	$75.57	9.21%	-6.02%
Gold-GC=F	$1,829.70	$1,979.30	$1,987.80	0.43%	8.64%

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

• Gross domestic product advanced 2.6% in the fourth quarter of 2022, according to the third and final estimate from the Bureau of Economic Analysis. GDP rose 3.2% in the third quarter. Personal consumption expenditures, which accounted for about 70.0% of GDP, rose 1.0% in the fourth quarter, lower than the 2.3% advance in the third quarter. Spending on goods declined 0.1%, while spending on services rose 1.6%. Spending on fixed investment fell 3.8% in the fourth quarter (-3.5% in the third quarter), pulled lower by a 25.1% decrease in residential fixed investment. Exports decreased 3.7% after advancing 14.6% in the previous quarter. Imports, which are a negative in the calculation of GDP, fell 5.5% in the fourth quarter, lower than the 7.3% decrease in the third quarter. Consumer prices rose 3.7% in the fourth quarter (4.3% in the third quarter). Excluding food and energy prices, consumer prices rose 4.4% (4.7% in the third quarter). For 2022, GDP advanced 2.1%, compared with an increase of 5.9% in 2021. The increase in GDP in 2022 primarily reflected increases in consumer spending, exports, private inventory investment, and nonresidential fixed investment that were partly offset by decreases in residential fixed investment and federal government spending. Imports increased.
• Consumer prices continued to rise in February. Following a 0.4% increase in the Consumer Price Index, the Personal Consumption Expenditures Price Index rose 0.3%. Excluding food and energy, the PCE price index also increased 0.3%. Since February 2022, prices have risen 5.0%. Consumer spending, as measured by the Personal Consumption Expenditures Index, increased 0.2% in February. Personal income rose 0.3%, while disposable (after-tax) personal income increased 0.5%.
• The advance report on international trade in goods revealed that the trade deficit widened by 0.6% in February over the previous month’s total. Trade activity lessened overall in February as exports declined 3.8% and imports decreased 2.3%.
• The national average retail price for regular gasoline was $3.421 per gallon on March 27, $0.001 per gallon less than the prior week’s price and $0.810 less than a year ago. Also, as of March 27, the East Coast price decreased $0.012 to $3.297 per gallon; the Gulf Coast price increased $0.060 to $3.082 per gallon; the Midwest price fell $0.021 to $3.241 per gallon; the Rocky Mountain price decreased $0.094 to $3.537 per gallon; and the West Coast price rose $0.013 to $4.378 per gallon. Residential heating oil prices averaged $4.037 per gallon on March 27, $0.060 below the previous week’s price and $1.054 per gallon less than a year ago.
• For the week ended March 25, there were 198,000 new claims for unemployment insurance, an increase of 7,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended March 18 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended March 18 was 1,689,000, an increase of 4,000 from the previous week’s level, which was revised down by 9,000. States and territories with the highest insured unemployment rates for the week ended March 11 were New Jersey (2.6%), Rhode Island (2.4%), California (2.3%), Massachusetts (2.3%), Minnesota (2.2%), Illinois (2.0%), Alaska (1.9%), Montana (1.9%), New York (1.9%), and Connecticut (1.8%). The largest increases in initial claims for unemployment insurance for the week ended March 18 were in Massachusetts (+1,293), Mississippi (+729), Georgia (+627), the District of Columbia (+607), and Tennessee (+513), while the largest decreases were in California (-1,085), New York (-1,056), New Jersey (-678), and Michigan (-644).

Eye on the Week Ahead

Manufacturing and services have lagged for much of this year. The March purchasing managers’ survey results for manufacturing and services are out this week and may show a continued slowdown in both sectors. The employment figures for March are also out this week. Job gains have been solid throughout the year, which has supported the Federal Reserve’s policy of interest-rate hikes.