Holbrook Insights

Weekly Market Update - May 2, 2022

As we approach the Federal Reserve (Fed)'s May 3-4 meeting, last week's GDP report for the first quarter of 2022 is a poignant reminder of the fine line the Fed must walk to appropriately balance the risks of continued inflation and the potential for a rate-induced recession. The production decline of 1.4 percent on an annualized basis marks the weakest quarter since spring of 2020 when the Covid-19 pandemic initially kicked off in the United States. Still, the underlying data and strength of consumers and businesses point to continued growth for the U.S.—if supply chain issues continue to ease and the pandemic remains at bay.

Weekly Market Update - April 18, 2022

Inflation increased 8.5 percent year-over-year in March, according to data released last week. Faced with this multidecade high, markets eagerly await the Federal Reserve’s (Fed’s) May meeting to see what’s in store for interest rates and the Fed’s balance sheet.
 
The S&P 500 fell for the second straight week. Investors continue to question how the Fed will navigate a soft landing for the economy with inflation and expectations for inflation reaching historic highs. Earnings season got rolling, with JPMorgan Chase, Wells Fargo, Goldman Sachs, and Morgan Stanley among notable banks reporting.

Weekly Market Update - April 4, 2022

The U.S. Labor Department's Friday report showed 431,000 jobs added in March, bringing the unemployment rate down to 3.6 percent. With employment numbers continuing to bolster the case for a more aggressive interest rate path moving forward, a rate hike of 50 basis points (bps) at the Federal Reserve (Fed)'s May meeting seems to be gaining momentum. U.S. Treasury yields were relatively stable over the past week with modest movements across the curve. 
 
On Tuesday, the Conference Board Consumer Confidence survey for March was released. The report showed that confidence rose from a downwardly revised 105.7 in February to 107.2 in March against calls for 107. Improving consumer views on the current state of the economy drove this modest rebound after it hit a one-year low in February, as the subindex rose to its highest level since last July. Declining medical risks and continued improvement for the labor market played a part in this improvement.

Weekly Market Update - March 15, 2022

February inflation numbers show a 7.9 percent increase in prices over the past 12 months, marking the fastest Consumer Price Index (CPI) acceleration since 1982 with oil prices adding to the pressure. All eyes will be on the Federal Reserve (Fed) this week as we wait to see what comes out of the March 15-16 meeting.
 
U.S. equities fell for a second consecutive week as geopolitical tensions continued to weigh on both stocks and investors’ minds. Ukrainian and Russian diplomats met again last Thursday but failed to reach an agreement for a ceasefire. Energy stocks continued their move higher despite a more than 5 percent drop in in WTI crude following last week’s 26 percent boost. Utilities and materials stock also performed well as short-term inflationary pressure loomed over equity markets.

Weekly Market Update - March 7, 2022

Global markets fell last week as investors took a risk off approach amid uncertainty surrounding the conflict in Ukraine. The combination of heavy sanctions and cutting business ties led to defensive positioning by investors. The largest moves last week were in energy and commodities since Russia and Ukraine are major global producers.
 
We finished the week with Friday’s release of the February employment report. The report showed 678,000 jobs were added during the month, far greater than the forecasted 423,000. The December and January job reports were also revised up by an additional 92,000 jobs. This better-than-expected result marks the best month for job gains since October 2021, indicating that the impact from the recent wave of infections on hiring has largely declined.

Weekly Market Update - February 28, 2021

Global markets fell last week as investors took a risk off approach amid uncertainty surrounding the conflict in Ukraine. The combination of heavy sanctions and cutting business ties led to defensive positioning by investors. The largest moves last week were in energy and commodities since Russia and Ukraine are major global producers.
 
We finished the week with Friday’s release of the February employment report. The report showed 678,000 jobs were added during the month, far greater than the forecasted 423,000. The December and January job reports were also revised up by an additional 92,000 jobs. This better-than-expected result marks the best month for job gains since October 2021, indicating that the impact from the recent wave of infections on hiring has largely declined.

Weekly Market Update - February 14, 2022

The U.S. Treasury curve saw further flattening last week, increasing on the short end of the curve and remaining relatively flat on the longer end of the curve.
 
Markets were mixed last week. Growth sectors such as technology, communication services, and consumer discretionary stocks sold off sharply. Value sectors such as energy, materials, and financials fared better, which is a theme for 2022 thus far. Thursday’s hotter-than-expected January Consumer Price Index (CPI) report indicated a 0.6 percent month-over-month increase and saw bond rates move higher.

Weekly Market Update - February 7, 2022

The U.S. Treasury yield curve shifted higher last week as economic data moved upward. Friday’s January employment report showed a rise in nonfarm payrolls of 467,000 versus an average economist expectation of 51,000. In addition, November and December payroll numbers were revised to an additional 398,000 and 311,000, respectively.
 
Markets moved higher despite a volatile week of trading at the company level. The mega-cap names, Alphabet (Google), Meta Platforms (Facebook), and Amazon, all reported mixed results this week. The first of the three was Alphabet (Google), which beat revenue and earnings.

Weekly Market Update - January 31, 2022

The U.S. Treasury curve continued to flatten last week. Yields on the front end of the curve moved higher as commentary from the Federal Reserve (Fed) members became more hawkish. Raphael Bostic, president of the Federal Reserve Bank of Atlanta, suggested that a rate hike in March was possible and a 50 basis points (bps) hike may be necessary.
 
Markets saw modest reversals in trends from the prior week’s sell-off. The positive outlook from the Fed and a stronger-than-expected estimate of fourth-quarter gross domestic product (GDP) growth supported a mild recovery last week. The Dow Jones Industrial Average was the standout of major domestic indices, as Visa (V), American Express (AXP), Apple (AAPL), Microsoft (MSFT), IBM (IBM), and Dow Inc. (DOW) lifted the index higher.

Weekly Market Update - January 24, 2022

Markets were rattled by the move higher in Treasury rates following the Martin Luther King Jr. holiday. The 2-year Treasury yield, which affects short-term borrowing, was up 0.13 percent over the course of three trading days. This move led to concerns with growth stocks, as these names typically benefit from lower borrowing rates to fuel their growth.
 
On Tuesday, the National Association of Home Builders Housing Market Index for January was released. The report showed that home builder confidence dropped modestly, with the index falling from 84 in December to 83 in January against calls for no change. This is a diffusion index where values above 50 indicate expansion, so the result continues to point to construction growth.