Weekly Market Report for February 21-24, 2023
- Markets
- S&P 500 -2%
- Dow Jones Industrial Average -2.6%
- NASDAQ -1.9%
- Russell 2000 -2.4%
Domestic equity markets finished the week lower. Inflation narratives dominated headlines when the Federal Reserve’s preferred inflation gauge, personal consumption expenditures (PCE), inched higher. As a result, Wall Street forecasted that peak rates are rising. And when rates are anticipated to rise, stock markets tend to head south. Rate hikes also affect behavior. Individuals are less apt to spend money on goods and services when borrowing costs increase. And companies are less likely to engage in hiring, research and development, and other growth-oriented activities. Several macroeconomic factors continue to head in the wrong direction. This is fueling the rate-hike narrative. January’s payroll data is one such data point. It’s important to note that the Bureau of Labor Statistics (BLS) changed the methodology behind the payroll calculation. So, some data is skewed which makes economic conditions appear worse than they actually are. Economic noise is prevalent. Stay disciplined.