Stocks & bonds both gained, as investors warmed up to the idea that the Federal Reserve will soon finish hiking rates, as inflation has started to slow. The banking crisis propelled markets higher, thinking tighter lending standards will slow the economy, perhaps putting an end to Powell’s quest to continue raising rates.
For the quarter, the Dow Jones was the laggard, rising .9%. The S&P 500 rose 7.5%, the Russell 2000 2.7% and the Nasdaq composite a whopping 17%. It is worth noting the “equal” weighted S&P 500 returned 2.39%. Its rather obvious technology did the heavy lifting. For this to continue, inflation and rates must continue to moderate.
Over the pond, foreign stocks gained 8.6% for the quarter and emerging markets rose 4.0%.
The 10-Year US Treasury yield finished the 1st quarter with a yield of 3.48%, down from 3.84% on January 1st.
Oil finished where it ended 2022, with WTI Crude priced last Friday @ $75.67/barrel.
Q2 Starts with an OIL Spike!
When I turn on CNBC first thing in the am, I never know what I’ll hear & see!
Today was no let down as OPEC decided to cut OIL production, pushing the price of WTI Oil up to just under $80/barrel. This production cut amounts to 1.16 million barrels per day, beginning in May.
In the very least, this will push gasoline prices higher. Some are suggesting the price of oil will rise to $100/barrel this year. Let’s hope that’s not the case.
Is this reason for concern? Gas prices were the first to moderate helping to reduce inflation numbers. If gas prices do in fact increase with any significance, the Fed’s job of fighting inflation may have just become more challenging.
Jobs Number this Friday
On Friday, we’ll hear the jobs creation number for March. So far this year, we’ve created more jobs than anticipated. The consensus is for job gains of 195k, down from 311k in February, and 511k in January.
The good news is that the market is closed this Friday when the jobs number will be reported!
One of the most important sets of numbers this quarter will be corporate profits. After shrinking approximately 2.5% in the 4th quarter, many believe this quarter will see a reduction of 4.5%.
Personally, I’m looking forward to earnings bottoming. When corporate profits again start to increase, that’s typically when we see gains in the market we can bank on. Let’s hope the earnings bottom is sooner than later!