The Bad News Trend…| March 3, 2023

AUTHOR: Jason Roque, MS, CFP®, APMA®, AWMA®
TITLE:       Investment Adviser Rep – CCO
TAGS:   S&P 500, NASDAQ, CPI, Retail Sales, PCE

It was a good week for markets. Lately, that has been bad news for the economy. Did the trend hold?

Monday   S&P 500 0.30% | NASDAQ 0.63%

Core durable goods expanded more than expected. This signaled an expansion of spending that was not anticipated. Markets welcomed the growth with green on the screen. An oddity as of late where good news yielded good markets.

Tuesday   S&P 500 0.30% | NASDAQ 0.10%

February closed down 2.61% (S&P 500) for the month after a strong open to the year in January. Home prices cooled in December to a YoY growth of 6.6%. The March report should be the tipping point into negative growth. Additionally, Consumer Confidence came in weaker than expected. Both factors hurt market sentiment for the day, bringing a down market.

Wednesday   S&P 500 0.47% | NASDAQ 0.66%

Markets opened in March much the way they ended February… calendars do not matter. ISM Manufacturing data slightly missed expectations which signaled recession. The bad news actually yielded bad markets.  The focus remains squarely on interest rates as the 10-year treasury breached 4% Wednesday. This signaled a more aggressive Federal Reserve Board (FRB), which likely led to the red on the screen!

Thursday   S&P 500 0.76% | NASDAQ 0.73%

There was a 180° turn on markets Thursday. They opened in the red on news of continued strength from the jobs market. Things turned positive late, however, after one of the FRB members indicated that he was firmly in the 0.25% camp. Meaning that all the speculation over a 0.5% hike in March may be overdone… Interesting point the FRB member in question is a non-voting member for 2023.

Friday   S&P 500 1.62% | NASDAQ 1.97%

Services data Friday signaled resilience in the economy as ISM data showed continued economic expansion, coming in at 55.1. The bounce in markets solidified a positive week for the first time in four weeks. Interest rates fell slightly on the day, bringing the 10-year treasury back below 4%.

Conclusion   S&P 500 1.90% | NASDAQ 2.58%

The growth for the week was welcomed as March is getting off to a strong start. A common (and welcomed) theme across the week was that good news yielded good markets and vice versa. This is likely due to the transparent stage of tightening that the FRB is in. Should this trend continue, focus on the FRB could reduce and be redirected to economic data’s true impact.

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