The major indexes ended mixed for the week, with the S&P 500 Index closing out its best month since December but its worst quarter since early 2020. Cyclically sensitive stocks underperformed, as investors girded for a slowdown in growth and the financial services and industrials sectors in the S&P 500 losing most. Higher interest rate expectations took a toll on the information technology sector, while the typically defensive consumer staples and utilities sectors outperformed.
Stock prices fluctuated over the week in apparent response to the evolving situation in the war in Ukraine. The week started off on a strong note, which was attributed to reports that Russia was prepared to allow Ukraine to join the European Union in return for a pledge to stay out of NATO. The S&P 500’s four-day winning streak was broken on Wednesday, however, after a Russian official said that talks with Ukraine yielded no breakthroughs and that Russia was regrouping forces in a push to complete the takeover of the eastern Donbas region. The mood soured further on Thursday, as Ukrainian President Volodymyr Zelenskyy said that Ukrainian forces are preparing for new Russian attacks. After rising briefly on the renewed tensions, oil prices resumed their decline following the Biden administration’s announcement of an extended release from the nation’s Strategic Petroleum Reserve to combat inflationary pressures.
The week brought several closely watched economic reports, most of which came in roughly in line with consensus expectations. The most prominent of these may have been the March nonfarm payrolls report, which showed that job gains fell somewhat below expectations at 431,000 versus 490,000. That said, the unemployment rate fell a bit more than expected, to 3.6%. Monthly growth in average hourly earnings met expectations, at 0.4%, as did monthly consumer income gains, at 0.5%. Personal spending, reported Thursday, only rose 0.2%—less than expected and perhaps reflecting a growing unwillingness to pay higher prices. February job openings remained little changed and near record highs.
These economic indicators, although somewhat understated in the media, might be the most “telling” for the long-term health of the markets. World events will always have short-term impact, but these periodic reports provide a more robust glimpse into the true financial health of the nation. Much as the book of Psalms speaks of the steadfast truths that should guide our lives—“Your word is a lamp to my feet and a light to my path”; Psalm 119:105—the steadfast nature of these economic reports provides a light (albeit often dimmed by other factors) to our team’s path when seeking opportunities and minimizing threats in a volatile market.
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