Mid-Week Market Minute 3.29.23

Stocks, Bond Slightly Higher; PCE Data on Friday

Stocks were mostly higher in the U.S. and abroad this week as markets digested higher interest rates amidst the recent banking crisis. The S&P 500 was higher by about 1% in early trading this week, bolstered by the energy sector which benefited from a sharp move higher in oil prices. Across the pond, Hong Kong’s Hang Seng index jumped this week as Chinese tech giant Alibaba announced it will split its company into six business groups.

In bonds, interest rates marched higher on the heels of the Federal Reserve’s decision to hike interest rates by 0.25% (25 basis points) last week. As of Wednesday, the yield on the 2-year Treasury note was trading around 4.13%. Despite the recent move higher, interest rates remain significantly lower than where they started March, as investors continue to believe the Federal Reserve may put future rate hikes on pause considering the recent banking crisis.

On the data front, the Dallas Fed Manufacturing Activity Index unexpectedly ticked lower in March, signaling economic activity is continuing to slow. Meanwhile, the Conference Board’s Consumer Confidence Index jumped to 104.2 from the prior month’s 103.4 print. Investors will keep a close eye on the Personal Consumption Expenditures (PCE) price index due out on Friday, which is the Fed’s preferred measure of inflation. Expectations are for core prices to have risen by about 4.7% year-over-year.

Source: GSAM, CNBC, JPMorgan

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