Mid-Week Market Minute 3.1.23

Dow, S&P Finish Down Month; Jobs Report This Week

Stocks were flat in early trading this week as investors looked forward to turning the page on a rather stark February. For the month, the Dow Jones Industrial Average and the S&P 500 were down about 4.2% and 2.6%, respectively. Additionally, bonds gave up most of their gains from January, as interest rates moved markedly higher. After starting February around 3.40%, the yield on the 10-year Treasury note now is trading around 3.95%. Despite the recent sell-off, stocks in the U.S. still are about 3.5% higher for the year.

Several key themes from last year continue to drive market performance in early 2023, specifically the Federal Reserve and inflation. Following higher-than-expected inflation readings over the past month, the Federal Reserve’s interest-rate hiking cycle likely is to continue through the first half of this year. In just about a month, mortgage rates have risen half a percentage point, and that has pushed demand for mortgages to buy a home to a 28-year low. According to the Mortgage Bankers Association, mortgage applications to purchase a home dropped 6% week over week. Demand is down 44% compared to the same period last year, when mortgage rates were in the 4% range, compared to nearly 7% today.

For the rest of the week, investors will get a glimpse at the ISM manufacturing index on Wednesday, which is expected to show a modest improvement considering China’s reopening. Thursday morning will bring the Job Openings and Labor Turnover (JOLT) report, where investors will look for signs of a softening labor market. In addition, there will be several speaking engagements from various members of the Federal Reserve to round out the week.

Source: GSAM, CNBC, JPMorgan

This communication is for informational purposes only. It is not intended as investment advice or an offer or solicitation for the purchase or sale of any financial instrument.

Indices are unmanaged, represent past performance, do not incur fees or expenses, and cannot be invested into directly. Past performance is no guarantee of future results.