Author: dredheadz

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

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

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

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

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

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

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.

The Markets (as of market close March 24, 2023)

Investors were on edge for most of the week, with concerns about banking, rising interest rates, inflation, and volatile stock and bond markets. Treasury yields dipped to their lowest levels since September. Indicative of the bumpy week of trading, the Russell 2000 gained, then fell to its lowest level since October, then bounced back to end the week higher. By the end of last week, the Nasdaq and the S&P 500 advanced the furthest among the benchmark indexes listed here. Ten-year Treasury yields ended about where they began. The dollar advanced later in the week, but not enough to keep from closing lower. Crude oil prices remained below $70.00 per barrel, despite closing the week up more than 4.0%. Gold prices slipped minimally.

Stocks closed last Monday higher to begin the week. Investors held the line with equities as they awaited the latest action from the Federal Reserve following the conclusion of its two-day meeting on Wednesday. All 11 S&P 500 market sectors ended the session up, with energy, financials, communication services, consumer discretionary, and materials leading the way. Among the benchmark indexes listed here, the Dow (1.2%) and the Russell 2000 (1.1%) rose the most, followed by the S&P 500 (0.9%), the Global Dow (0.8%), and the Nasdaq (0.4%). Ten-year Treasury yields gained 8.6 basis points to close at 3.48%. Crude oil prices fell earlier in the day but reversed course later to advance 1.2% to $67.55 per barrel. The dollar dipped lower, while gold prices rose 0.5%.

Wall Street saw another day of positive gains last Tuesday, with several of the benchmark indexes rising for the sixth out of the last seven sessions. The small caps of the Russell 2000 gained 1.9%, to lead the benchmark indexes listed here. The Nasdaq rose 1.6%, followed by the Global Dow (1.5%), the S&P 500 (1.3%), and the Dow (1.0%). The yield on 10-year Treasuries jumped 12.5 basis points to reach 3.60%. Crude oil prices climbed 2.8% to $69.50 per barrel. The dollar slipped marginally, while gold prices dropped 2.0%.

Last Wednesday saw stocks finish lower following a late-day sell-off. After the Federal Reserve hiked interest rates 25.0 basis points (see below), Fed Chair Jerome Powell suggested that a slowdown in rate hikes was not in the foreseeable future. The Russell 2000 gave back gains from the prior day, falling 2.8% by the end of trading. The Dow, the S&P 500, and the Nasdaq each fell by at least 1.6%. The Global Dow dipped 0.2%. Yields on 10-year Treasuries slid 10.6 basis points to end the day at 3.50%. Crude oil prices climbed back up over the $70.00 per barrel mark earlier in the day, only to close at about $69.91 per barrel. The dollar fell for the third consecutive session, while gold prices advanced 1.6%.

Equities ended higher last Thursday, following a volatile session. Despite big swings throughout the day, only the Russell 2000 (-0.4%) ended lower among the benchmark indexes listed here. The Nasdaq rose 1.0%, the S&P 500 advanced 0.3%, the Dow added 0.2%, and the Global Dow inched up 0.2%. Communication services and information technology were the only sectors closing higher, with energy and utilities falling more than 1.0%. Bond prices rose on increased demand, sending yields lower. Ten-year Treasury yields slid 9.4 basis points to close at 3.40%. Crude oil prices ended a short rally, down 2.3% to $69.24 per barrel. The dollar and gold prices climbed higher.

Stocks closed higher last Friday to end a volatile week of trading. Among the indexes listed here, only the Global Dow lost value (-0.93%). The remaining indexes ended the session higher, led by the Russell 2000 (0.9%), followed by the S&P 500 (0.6%), the Dow (0.4%), and the Nasdaq (0.3%). Ten-year Treasury yields finished the day lower for the third straight session, slipping 2.6 basis points to 3.38%. The dollar advanced, while gold prices fell. Crude oil prices fell 1.0% to $69.20 per barrel.

Stock Market Indexes

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 Federal Open Market Committee increased the target range for the federal funds rate 25.0 basis points to 4.75%-5.00%, the highest range since 2007. The Committee noted that job gains picked up, while inflation remained elevated, and it left little question that it is committed to bringing inflation down to 2.0%. The FOMC specifically referenced the U.S. banking system, indicating that it is “sound and resilient,” despite recent bank closures. However, the Committee predicted that “recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation.” While anticipating additional policy firming to return inflation to 2.0% over time, the Committee indicated that it would continue to monitor labor market conditions, inflation pressures and inflation expectations, and financial and international developments, and “would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.”
• Sales of existing homes increased in February for the first time in the last 12 months. Existing-home sales rose 14.5% last month, the largest monthly percentage increase since July 2020. Despite the February increase, existing-home sales remained 22.6% below their year-earlier sum. Total housing inventory sat at a 2.6-month supply in February, down from January (2.9%) but up from 1.7 months in February 2022. The median existing-home price was $363,000 in February, up slightly from $361,200 in January but down from the February 2022 median price of $363,700. Sales of existing single-family homes jumped up 15.3% in February from the previous month but were 21.4% under the February 2022 price. Inventory of single-family homes was 2.5 months in February, down from 2.9 months in January and under the February 2022 pace of 2.7 months. The median price for existing single-family homes was $367,500 in February, up from the January price of $365,400 but lower than the February 2022 price of $370,000.
• According to the Census Bureau, sales of new single-family homes in February increased 1.1% above the January rate. Despite the increase last month, new home sales were 19.0% below the February 2022 estimate. Available inventory sat at an 8.2-month supply based on the current sales pace, 0.1 percentage point below the January pace. The median sales price was $438,200 ($426,500 in January), while the average sales price was $498,700 ($479,800 in January).
• New orders for manufactured durable goods, down three of the last four months, decreased 1.0% in February, according to the Census Bureau. This followed a 5.0% 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 after falling 2.8%. Shipments, down two consecutive months, fell 0.6% in February. Inventories increased 0.2% in February, increasing for the 24th out of the last 25 months.
• The national average retail price for regular gasoline was $3.422 per gallon on March 20, $0.034 per gallon less than the prior week’s price, and $0.817 less than a year ago. Also, as of March 20, the East Coast price decreased $0.006 to $3.309 per gallon; the Gulf Coast price declined $0.065 to $3.022 per gallon; the Midwest price fell $0.048 to $3.262 per gallon; the Rocky Mountain price decreased $0.099 to $3.631 per gallon; and the West Coast price decreased $0.037 to $4.365 per gallon. Residential heating oil prices averaged $4.131 per gallon on March 20, $0.053 below the previous week’s price, and $0.755 per gallon less than a year ago.
• For the week ended March 18, there were 191,000 new claims for unemployment insurance, a decrease of 1,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended March 11 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended March 11 was 1,694,000, an increase of 14,000 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 March 4 were New Jersey (2.7%), Rhode Island (2.5%), Massachusetts (2.4%), California (2.3%), Minnesota (2.3%), Alaska (2.0%), Illinois (1.9%), Montana (1.9%), New York (1.9%), and Puerto Rico (1.9%). The largest increases in initial claims for unemployment insurance for the week ended March 11 were in Ohio (+2,401), Indiana (+700), Illinois (+613), Florida (+596), and Oklahoma (+472), while the largest decreases were in New York (-15,436), California (-2,812), Oregon (-1,133), Minnesota (-1,042 ), and Georgia (-962).

Eye on the Week Ahead

The third and final estimate of fourth-quarter gross domestic product is available this week. The second of three estimates, released last month, showed the economy accelerated at a rate of 2.7%. The February data on personal income and outlays is also out this week. January saw personal income increase 0.6%, consumer spending advance 1.8%, and consumer prices rise 0.6%.

The Markets (as of market close March 17, 2023)

Stocks closed mostly higher during a volatile week. The Nasdaq and the S&P 500 led the benchmark indexes listed here, while the Dow, the Russell 2000, and the Global Dow declined in value. Crude oil prices settled at the lowest level since December 2021. Gold prices vaulted up nearly 6.0%, while the dollar ticked lower. Financials took a hit last week as U.S. banks borrowed nearly $165 billion through the Federal Reserve on the heels of the failure of Silicon Valley Bank. On the other hand, the technology sector was clearly the beneficiary of an otherwise tumultuous week. In fact, the Nasdaq enjoyed its best week since November of 2022.

Last week began with stocks generally sliding lower by the end of Monday’s trading session. Among the benchmark indexes listed here, only the Nasdaq (0.5%) ended higher. The Russell 2000 (-1.6%), the Global Dow (-1.5%), the Dow (-0.3%), and the S&P 500 (-0.2%) closed lower. Bond prices surged, with yields tumbling. Ten-year Treasury yields lost 18.0 basis points to close at 3.51%. With two banks closing last weekend, bank stocks were hard hit on Monday. Investors moved to consumer staples, utilities, and health care sectors, which outperformed. Crude oil prices dropped 2.90%, settling at $74.46 per barrel. The dollar slid lower. Gold prices advanced over $50.00 to reach $1,917.60 per ounce.

Stocks reversed course last Tuesday, surging higher following a stretch of poor returns. The Nasdaq led the benchmark indexes, climbing 2.1%, followed by the Russell 2000 (1.9%), the S&P 500 (1.7%), the Dow (1.1%), and the Global Dow (0.6%). Ten-year Treasury yields closed at 3.79%, up 12.3 basis points. Crude oil prices fell to $71.55 per barrel, the lowest price since December 2022. The dollar was little changed, while gold prices edged lower. Investors, hoping that the Federal Reserve will slow the pace of interest-rate hikes, were encouraged by the latest Consumer Price Index (see below), which was in line with expectations.

Investors moved from risk last Wednesday as shares of a major financial institution tumbled to record lows, adding more pressure to the financial sector. Only the Nasdaq was able to eke out a gain of 0.1% by the close of trading. The remaining benchmark indexes listed here closed in the red, led by the Global Dow (-2.3%), followed by the Russell 2000 (-1.7%), the Dow (-0.9%), and the S&P 500 (-0.7%). Ten-year Treasury yields fell 14.6 basis points to 3.49%. Crude oil prices have come under pressure lately, declining more than 7.0% during the day, ultimately falling 4.3% to $68.27 per barrel. Gold prices (+0.6%) and the dollar (+1.1%) increased.

Stocks enjoyed a broad-based rally last Thursday as financials rebounded, following reports that two major banks were getting financial assistance. The Nasdaq gained 2.5% to lead the benchmark indexes listed here, followed by the S&P 500 (1.8%), the Russell 2000 (1.5%), the Dow (1.2%), and the Global Dow (0.9%). Ten-year Treasury yields rose 9.3 basis points, closing at 3.58% as bond prices slid lower. Crude oil prices climbed $0.65 to $68.26 per barrel. Both the dollar and gold prices declined.

Last Friday saw stocks tumble lower as Wall Street was unable to extend the previous day’s gains. The Russell 2000 fell 2.6%, followed by the Dow (-1.2%), the S&P 500 (-1.1%), the Global Dow (-0.8%), and the Nasdaq (-0.7%). Ten-year Treasury yields lost 19.0 basis points, ending the day at 3.39%. Crude oil prices dropped to $66.29 per barrel. The dollar dipped lower, while gold prices advanced.

Stock Market Indexes

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 Consumer Price Index rose 0.4% in February after increasing 0.5% in January. Over the 12 months ended in February, the CPI has risen 6.0%. The increase in prices for shelter (0.8%) accounted for over 70.0% of the overall CPI increase. Prices, less food and energy, rose 0.5% in February after advancing 0.4% in January. In February, prices for food rose 0.4% (6.0% for the past 12 months); energy prices rose 0.6% (gasoline prices rose 1.0%); prices for apparel advanced 0.8%; and prices for transportation services rose 1.1%. Prices for new vehicles rose 0.2%, while prices for used cars and trucks fell 2.8%.
• Prices at the producer level declined 0.1% in February, following a 0.3% advance in January. For the 12 months ended in February, producer prices rose 4.6%. In February, prices for goods (-0.2%) and services (-0.1%) declined. A major factor in the decrease in prices for goods was a 2.2% decline in prices for foods, with prices for chicken eggs dropping 36.1%, accounting for over 80% of the decline in goods prices. Energy prices also slid lower, falling 0.2% last month. Producer prices, less foods and energy, advanced 0.3% in February. Leading the decline in prices for services was a 0.8% drop in margins for trade services (trade indexes measure changes in margins received by wholesalers and retailers). Prices for transportation and warehousing services fell 1.1%. In contrast, prices for services, less trade, transportation, and warehousing, advanced 0.3%.
• According to the latest release from the Census Bureau, retail and food services prices fell 0.4% last month after increasing 3.2% in January. Retail and food services prices are 5.4% higher compared to February 2022. Retail trade sales were down 0.1% from January 2023, but up 4.0% from a year ago. Prices for food services and drinking places were up 15.3% from February 2022, while prices for general merchandise stores were up 10.5% from last year.
• Prices for U.S. imports edged down 0.1% in February after declining 0.4% in January. Lower fuel prices (-4.9%) in February more than offset higher nonfuel prices (0.4%). Prices for imports decreased each month since June 2022 with the exception of a 0.1% advance in December 2022. Import prices declined 1.1% from February 2022 to February 2023, the first 12-month decrease since December 2020, and the largest 12-month drop since September 2020. Export prices increased 0.2% in February, following a 0.5% advance the previous month. Prior to January, export prices hadn’t increased since June 2022. Nevertheless, export prices fell 0.8% over the past 12 months ended in February, the first 12-month decrease since the period ended November 2020. Driving the increase in export prices in February was a 1.0% increase in agricultural export prices. Export prices, excluding agricultural prices, ticked up 0.1% last month.
• Industrial production remained stagnant, unchanged in February from the previous month. Since September 2022, industrial production has risen only one month, advancing 0.3% in January. Manufacturing output edged up 0.1% but was 1.0% below its level in February 2022. Mining fell 0.6%, while utilities rose 0.5%. In February, total industrial production was 0.2% below its year-earlier level.
• The number of issued residential building permits jumped 13.8% in February, although they remain 17.9% under the February 2022 rate. Building permits issued for single-family construction rose 7.6% in February. The number of housing starts increased 9.8% in February, but trail the February 2022 pace by 18.4%. Single-family housing starts were 1.1% over the January total. Housing completions increased 12.2% above the January estimate and 12.8% over the February 2022 rate. Single-family housing completions in February were 1.0% above the previous month’s pace.
• The national average retail price for regular gasoline was $3.456 per gallon on March 13, $0.067 per gallon more than the prior week’s price, but $0.859 less than a year ago. Also, as of March 13, the East Coast price increased $0.073 to $3.315 per gallon; the Gulf Coast price increased $0.108 to $3.087 per gallon; the Midwest price rose $0.045 to $3.310 per gallon; the Rocky Mountain price decreased $0.012 to $3.730 per gallon; and the West Coast price increased $0.061 to $4.402 per gallon. Residential heating oil prices averaged $4.186 per gallon on March 13, $0.059 below the previous week’s price, and $0.749 per gallon less than a year ago.
• For the week ended March 11, there were 192,000 new claims for unemployment insurance, a decrease of 20,000 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 4 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended March 4 was 1,684,000, a decrease of 29,000 from the previous week’s level, which was revised down by 5,000. States and territories with the highest insured unemployment rates for the week ended February 25 were Rhode Island (2.9%), New Jersey (2.7%), Massachusetts (2.5%), California (2.4%), Minnesota (2.4%), Montana (2.1%), New York (2.1%), Alaska (2.0%), Connecticut (2.0%), and Illinois (2.0%). The largest increases in initial claims for unemployment insurance for the week ended March 4 were in New York (+16,244), California (+9,918), Kentucky (+2,789), Oregon (+1,276), and Ohio (+1,209), while the largest decreases were in Rhode Island (-1,687), Massachusetts (-1,134), the District of Columbia (-937), Illinois (-753), and Florida (-428).

Eye on the Week Ahead

The latest data on the housing market is available this week. Sales of existing homes have fallen 12 consecutive months heading into February. It is unlikely that trend will change with the release of the current information from the National Association of Realtors®. New home sales, conversely, have fared much better.

The Markets (as of market close March 10, 2023)

Entering last week, investors were poised to review the latest employment data and its potential impact on the course of the Federal Reserve. Instead, last Friday saw financial regulators close Silicon Valley Bank as the Federal Deposit Insurance Corporation (FDIC) took control of the bank’s assets. All in all, Wall Street suffered through its worst week in 2023. Each of the benchmark indexes listed here lost notable value, led by the Russell 2000, which dropped more than 8.0%. The Dow has now fallen more than 3.7% below its 2022 closing value. The yield on 10-year Treasuries dropped from around 4.0% earlier in the week to 3.7% last Friday. The dollar ended the week eking out a gain, while gold prices were buoyed by a weaker dollar and reduced expectations that the Fed will be more aggressive with its interest-rate hikes.

Stocks began last Monday on an upswing, only to end the day finishing mixed. For most of the day, it appeared Wall Street was going to continue the rally from the previous week. Unfortunately, the Nasdaq (-0.1%) and the Russell 2000 (-1.5%) closed lower, while the Dow and the S&P 500 barely eked out gains of 0.1%. Ten-year Treasury yields inched higher, closing at 3.98%. Crude oil prices cracked the $80.00 mark, finishing at $80.56 per barrel. The dollar and gold prices slid lower.

Last Tuesday, Wall Street responded negatively to Federal Reserve Chair Jerome Powell’s assertion that interest rates would likely be raised more than previously suggested in order to fight rising inflation and cool the economy. Equities fell, while shorter-term Treasury yields and the dollar climbed higher. Each of the benchmark indexes listed here declined, with the Dow falling 1.7%, followed by the S&P 500 and the Global Dow (-1.5%), the Nasdaq (-1.3%), and the Russell 2000 (-1.1%). Yields on 10-year Treasuries dipped to 3.97%. Crude oil ended its five-session rally, declining $3.15 to $77.31 per barrel, the largest single-day drop in two months. Gold prices fell nearly 2.0%, while the dollar rose 1.3%.

Stocks finished mixed last Wednesday, with the Dow (-0.2%) and the Global Dow (-0.1%) falling, while the Nasdaq (0.4%) and the S&P 500 (0.1%) eked out gains. The Russell 2000 ended the day where it began. Crude oil prices declined for the second straight session, down $1.10 to $76.48 per barrel. Ten-year Treasury yields moved little, remaining at 3.97%. The dollar rose minimally, while gold prices slid for the third session in a row.

Wall Street endured a poor day last Thursday, with stocks moving lower. The financial sector was hit particularly hard, although all of the major sectors ended the session in the red. Among the benchmark indexes listed here, the Russell 2000 fell the furthest, dropping 2.8%, followed by the Nasdaq (-2.1%), the S&P 500 (-1.9%), the Dow (-1.7%), and the Global Dow (-0.8%). Bond prices advanced, pulling yields lower, with 10-year Treasury yields dipping 5.1 basis points to close at 3.92%. Crude oil prices continued to drop, closing down about $1.12 to $75.54 per barrel. The dollar slipped lower, while gold prices advanced for the first time in several sessions.

Stocks fell for the fourth straight session last Friday. Each of the benchmark indexes listed here ended the day in the red, with the Russell 2000 (-3.0%) and the Nasdaq (-1.8%) falling the furthest. The S&P 500 slid 1.5%, the Global Dow dropped 1.3%, and the Dow lost 1.1%. Ten-year Treasury yields gave back 23.0 basis points to close at 3.69%. Crude oil prices gained $0.81 to hit $76.53 per barrel. The dollar dipped lower, while gold prices vaulted up $37.80 to $1,872.40 per ounce.

Stock Market Indexes

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 311,000 new jobs added in February, although the unemployment rate edged up 0.2 percentage point to 3.6%. The average monthly job gain over the past six months was 343,000. Last month, notable job gains occurred in leisure and hospitality, retail trade, government, and health care. Employment declined in information and in transportation and warehousing. The number of unemployed, at 5.9 million, edged up by 242,000 in February from the previous month. In February, the labor force participation rate was little changed at 62.5%, and the employment-population ratio held at 60.2%. These measures have shown little net change since early 2022 and remain below their pre-pandemic February 2020 levels (63.3% and 61.1%, respectively). In February, average hourly earnings rose $0.08 to $33.09. Over the past 12 months, average hourly earnings increased by 4.6%. The average workweek edged down by 0.1 hour to 34.5 hours in February.
• In January, there were 10.8 million job openings, a decrease of a little more than 400,000 from the December amount. The number of hires and total separations in January were little changed from their respective totals in December. In January, employees were less willing to voluntarily leave their jobs, while employers were more inclined to dismiss employees. The number of quits declined by about 200,000, while the number of layoffs and discharges increased by 241,000.
• According to the Bureau of Economic Analysis, the goods and services trade deficit was $68.3 billion in January, up $1.1 billion, or 1.6%, from the December deficit. January exports were $257.5 billion, $8.5 billion, or 3.4%, more than December exports. January imports were $325.8 billion, $9.6 billion, or 3.0%, more than December imports. Year over year, the goods and services deficit decreased $19.2 billion, or 21.9%, from January 2022.
• The government deficit jumped to $262.4 billion in February, $223.6 billion greater than the January deficit and $45.8 billion more than the February 2022 deficit. In February, government receipts were $262.1 billion ($447.3 billion in January), while government outlays were $524.5 billion ($486.1 billion in January). Through the first five months of the fiscal year, the total government deficit sits at $722.6 billion, $247.0 billion greater than the deficit over the same period in the previous fiscal year.
• The national average retail price for regular gasoline was $3.389 per gallon on March 6, $0.047 per gallon more than the prior week’s price, but $0.713 less than a year ago. Also, as of March 6, the East Coast price decreased $0.002 to $3.242 per gallon; the Gulf Coast price increased $0.067 to $2.979 per gallon; the Midwest price rose $0.095 to $3.265 per gallon; the Rocky Mountain price decreased $0.040 to $3.742 per gallon; and the West Coast price increased $0.091 to $4.341 per gallon. Residential heating oil prices averaged $4.243 per gallon on March 6, $0.013 above the previous week’s price, but $0.679 per gallon less than a year ago. According to the U.S. Energy Information Administration, in 2022, the United States exported 5.97 million barrels of petroleum product per day, an increase of 7.0% compared with 2021, setting a new record for total petroleum product exports.
• Both the number of new claims for unemployment insurance and the number of workers receiving insurance benefits increased sharply over the last reporting period. For the week ended March 4, there were 211,000 new claims for unemployment insurance, an increase of 21,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended February 25 was 1.2%, 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 February 25 was 1,718,000, an increase of 69,000 from the previous week’s level, which was revised down by 6,000. States and territories with the highest insured unemployment rates for the week ended February 18 were New Jersey (2.7%), Rhode Island (2.5%), Massachusetts (2.3%), Minnesota (2.3%), California (2.2%), Alaska (2.1%), Illinois (2.0%), Montana (2.0%), New York (1.9%), Connecticut (1.8%), Pennsylvania (1.8%), and Puerto Rico (1.8%). The largest increases in initial claims for unemployment insurance for the week ended February 25 were in Massachusetts (+4,438), Rhode Island (+1,210), New Jersey (+742), Arkansas (+619), and the District of Columbia (+494), while the largest decreases were in Kentucky (-6,164), California (-2,844), Texas (-1,426), Ohio (-1,274), and Michigan (-1,020).

Eye on the Week Ahead

The latest information on inflation is available this week with the February release of the Consumer Price Index, the Producer Price Index, and the retail sales report. Inflation rose in January after falling in the previous two months, setting up the likelihood that the Federal Reserve will initiate more interest-rate hikes over a longer period of time.

The Markets (as of market close March 3, 2023)

A late rally sent stocks higher by the end of last week. Each of the benchmark indexes listed here gained nearly 2.0%, with the Nasdaq climbing 2.6% to lead the way. The large caps of the Dow and S&P 500 also rallied at the end of the week and are above their respective 2022 year-end values. Ten-year Treasury yields inched higher, despite bond prices staging a late-week price increase. The dollar index dipped below 105, while gold prices enjoyed their first weekly advance, following four consecutive weekly declines. Crude oil prices closed up by more than 4.0%, erasing losses earlier in the week.

Wall Street saw stocks climb higher to kick off last week. Each of the benchmark indexes listed here ended last Monday’s session in the black, led by the Global Dow (0.8%), followed by the Nasdaq (0.6%). The S&P 500 and the Russell 2000 added 0.3%, while the Dow edged up 0.2%. The yield on 10-year Treasuries dipped slightly lower, ending the day at 3.92%. Crude oil prices slipped $0.60 to $75.73 per barrel. The dollar fell nearly half a percent, while gold prices gained $6.60 to reach $1,823.70 per ounce.

Stocks ended last Tuesday lower, following another up-and-down session. The large caps of the Dow (-0.7%) and the S&P 500 (-0.3%) closed lower, the Nasdaq dipped 0.1%, and the Global Dow lost 0.2%. Of the benchmark indexes listed here, only the Russell 2000 ended the day barely ahead after gaining 0.04%. Ten-year Treasury yields changed little, settling at 3.91%. The dollar and gold prices advanced. Crude oil prices closed up, ending the session at about $77.05 per barrel.

Last Wednesday began with a rally for stocks. Unfortunately, investors’ concerns about the Federal Reserve’s higher-for-longer policy of interest-rate hikes ultimately ended with stocks closing the session mixed. The Nasdaq (-0.7%) and the S&P 500 (-0.5%) ended the day lower, while the Dow, the Russell 2000 and the Global Dow ended the day flat. Ten-year Treasury yields added 7.8 basis points to reach 3.99%. Crude oil prices rallied to end the session at about $77.68 per barrel. The dollar slipped lower, while gold prices advanced for the third session in a row.

Wall Street rebounded last Thursday as dip buyers culled stocks that had lost value over the last few sessions. The Dow led the benchmark indexes listed here, gaining 1.1%, followed by the S&P 500 (0.8%), and the Nasdaq (0.7%), while the Russell 2000, and the Global Dow inched up 0.2%. Bond prices continued to fall, with yields on 10-year Treasuries above 4.0% for the first time since November 2022 after ending the session at 4.07%. Crude oil prices rose a few cents, reaching $77.97 per barrel. The dollar advanced, while gold prices fell.

Stocks continued to rally last Friday, ending the day and the week higher. Each of the benchmark indexes listed here posted solid gains by the close of trading, led by the Nasdaq (2.0%), followed by the S&P 500 (1.6%), the Global Dow (1.4%), the Russell 2000 (1.3%), and the Dow (1.2%). Bond prices reversed course from earlier sessions, climbing higher while yields slid lower. Ten-year Treasury yields dipped nearly 11.0 basis points to close at 3.96%. Crude oil prices neared $80.00 per barrel after gaining 2.0% to close at about $79.74 per barrel. The dollar slid lower, while gold prices rose higher.

Stock Market Indexes

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

• New orders for manufactured durable goods fell 4.5% in January after increasing 5.1% the previous month. Transportation was a drag on overall new orders, dropping 13.3% in January. Excluding transportation, new orders for durable goods increased 0.7%. Shipments of durable goods decreased for the first time in 17 months, slipping 0.1% in January. Shipments of transportation equipment dropped 1.7%, following 10 consecutive monthly increases. New orders for nondefense capital goods in January decreased 15.3%, while new orders for defense capital goods increased 3.8%.
• According to the latest purchasing managers’ index from S&P Global, companies reported a decline in manufacturing in February, although the pace of regression was softer than it was in January. The S&P Global US Manufacturing Purchasing Managers’ Index™ posted 47.3 in February. A reading of 50.0 or less indicates a decline in manufacturing. Weak client demand led to contractions in manufacturing output and new orders. The rate of price inflation accelerated again to a marked pace as firms sought to pass on higher costs to customers. Conversely, input costs increased at a softer rate.
• Unlike the manufacturing sector, surveyed purchasing managers’ saw growth in business activity in the services sector in February, according to the S&P Global US Services PMI™. While the uptick in business activity was marginal, it brought an end to seven months of contraction. Firms linked the increase in output in February to a pick-up in demand and a slower fall in new orders. However, inflationary pressures remained a drag on customer spending. Nevertheless, service providers increased employment at the fastest rate since September 2022.
• The international trade in goods deficit expanded by 2.0% in January over December. Exports of goods were $173.8 billion, 4.2% more than December exports. Imports of goods were $265.3 billion, 3.4% above the December total. The trade in goods deficit in January was 16.7% less than the deficit in January 2022.
• Average regular retail gas prices continued to fall last week. The national average retail price for regular gasoline was $3.342 per gallon on February 27, $0.037 per gallon less than the prior week’s price and $0.266 less than a year ago. Also, as of February 27, the East Coast price decreased $0.047 to $3.244 per gallon; the Gulf Coast price dipped $0.095 to $2.912 per gallon; the Midwest price fell $0.050 to $3.170 per gallon; the Rocky Mountain price decreased $0.044 to $3.782 per gallon; but the West Coast price increased $0.061 to $4.250 per gallon. Residential heating oil prices averaged $4.231 per gallon on February 27, $0.032 below the previous week’s price, but $0.177 per gallon more than a year ago.
• For the week ended February 25, there were 190,000 new claims for unemployment insurance, a decrease of 2,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended February 18 was 1.1%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended February 18 was 1,655,000, a decrease of 5,000 from the previous week’s level, which was revised up by 6,000. States and territories with the highest insured unemployment rates for the week ended February 11 were New Jersey (2.7%), Rhode Island (2.5%), Minnesota (2.3%), California (2.3%), Massachusetts (2.3%), Alaska (2.1%), Illinois (2.1%), Montana (2.0%), Connecticut (1.9%), Puerto Rico (1.9%), and New York (1.9%). The largest increases in initial claims for unemployment insurance for the week ended February 18 were in Kentucky (+6,099), New Jersey (+1,063), Kansas (+545), Pennsylvania (+496), and the District of Columbia (+378), while the largest decreases were in California (-4,706), Michigan (-2,521), New York (-2,105), Minnesota (-1,479), and Wisconsin (-1,420).

Eye on the Week Ahead

The employment figures for February are available at the end of this week. The labor sector continues to run hotter than expected, with over 500,000 new jobs added in January. The unemployment rate remains steady, while the number of unemployed persons hasn’t changed dramatically in several months, indicating that employment is probably nowhere near full capacity. A strong labor report will support further interest-rate hikes from the Federal Reserve as it tries to curb inflation.