 | AUTHOR: Jason Roque, MS, CFP®, APMA®, AWMA® TITLE: Investment Adviser Rep – CCO TAGS: S&P 500, NASDAQ, CPI, PPI, FRB, Rates |
Markets grew modestly last week. What does the data tell us about the hikes ahead?
Monday S&P 500 0.10% | NASDAQ 0.03%
With the previous Friday being Good Friday, Monday was the first market reaction to Jobs Friday. Soooo Happy Jobs Friday… On Monday… Anyway. Job adds were strong and wage growth slowed. Both are welcomed facts as the job market continues to show minimal impact from the Federal Reserve Boards (FRB) hikes. The Growth markets suffered on the news more than value markets. The data signals that the FRB has room to further hike things (if they want to).
Tuesday S&P 500 0.01% | NASDAQ 0.43%
Markets were modestly active on Tuesday as gains were wiped out in preparation for inflation data out Wednesday. The caution is warranted as February had a less than rosy outcome. The rate sensitive growth markets struggled more on the day as interest rates rose modestly.
Wednesday S&P 500 0.41% | NASDAQ 0.85%
Markets started hot on Wednesday as Consumer Price Index (CPI) signaled that inflation has slowed to 5% year over year. That hot start faded in the afternoon as the minutes from the most recent FRB meeting were released. They showed a surprising amount of concern from the FRB over the Silicon Valley Bank (SVB) failure. The concern caught markets off guard and stocks ended up in the red for the day.
Thursday S&P 500 1.33% | NASDAQ 1.99%
Initial jobless claims rose to 239K last week. The highest reading in quite some time. This is a healthy level that could signal rate hikes are starting to show some effect on the job market. Producer Price Index (PPI) came out on Thursday showing a slowing in price pressure for businesses. This is an upstream inflation reading that should be indicative of future CPI readings.
Friday S&P 500 0.21% | NASDAQ 0.35%
Financial earnings reflected an industry thriving under higher interest rates. JPMorgan, Wells Fargo, and Citigroup outperformed their earnings expectations, but was not enough to push markets (as a whole) higher. As banks show strength, it also signals an environment that can likely withstand additional rate hikes.
Conclusion S&P 500 0.79% | NASDAQ 0.29%
It was a busy week of important data points pertaining to the potential of rate hikes. Jobs data, CPI, PPI, SVB, and bank earnings all played a role. Bank earnings news will continue throughout this week and continue to influence confidence in the direction of future FRB rate hikes. Expectations currently are for one more rate hike to start May and potentially a summer in a holding pattern.
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