A Light to Our Path

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.

Any opinions expressed in this forum are not the opinion or view of American Portfolios Financial Services, Inc. (APFS) or American Portfolios Advisors, Inc.(APA) and have not been reviewed by the firm for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk and may result in a loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purposes of avoiding penalties that may be imposed by law. Each tax payer should seek tax, legal or accounting advice from a tax professional based on his/her individual circumstances.
This material is for informational purposes only. Neither APFS nor its Representatives provide tax, legal or accounting advice. Please consult your own tax, legal or accounting professional before making any decisions. Information has been obtained from sources believed to be reliable and are subject to change without notification. The information presented is provided for informational purposes only and not to be construed as a recommendation or solicitation. Investors must make their own determination as to the appropriateness of an investment or strategy based on their specific investment objectives, financial status and risk tolerance. Past performance is not an indication of future results. Investments involve risk and the possible loss of principal.