Weekly Market Update: April, 7, 2023

Market Data as of Week Ending: 4/7/2023 unless noted otherwise 

U.S. stock prices moved mostly lower over a holiday-shortened week as renewed growth concerns weighed on investors. The S&P 500 declined slightly, ending the week down -0.06%, while the Dow Jones Industrial Average benefitted from money flowing into blue chip names. For the second consecutive week, value stocks outperformed their growth counterparts while large-sized companies outperformed their small and mid-sized peers. Renewed growth concerns impacted cyclical sectors the most as the industrials, consumer discretionary, and materials sectors lagged while traditionally defensive sectors, such as health care and utilities, enjoyed nice gains. The energy sector also outperformed on news that OPEC+ plans to cut production by 1.16 million barrels a day beginning in May. Developed foreign and emerging markets stocks moved lower last week and underperformed domestic equities.

U.S. Treasury yields fell for the fourth week out of the past five as weak economic data and light issuance sent bond prices higher. The spread between the 10-year and 2-year U.S. Treasury yields remained unchanged as they both fell -0.09% to finish the week at 3.39% and 3.97%, respectively. Government bonds benefitted the most from the decline in yields, outperforming across the curve. High yield bonds were weighed down by several new issues to begin the month. Yields for investment grade corporate bonds and high yield bonds ended the week at 5.0% and 8.6%, respectively.

Economic data was mostly negative in what was a busy holiday week. The ISM manufacturing index fell for the fifth month in a row, dropping to 46.3% in March, its lowest level since May 2020. The ISM Services index also slowed in March, falling to 51.2% from 55.1%, marking a three-month low. U.S. factory orders declined by 0.7% in February, the third drop in the last four, led by a decrease in transportation equipment orders. Job openings fell to a 21-month low of 9.9 million in February, potentially signaling some loosening in what has been a historically tight labor market. The U.S. added 236,000 new jobs in March, in-line with expectations, as hiring continues to remain strong. The U.S. unemployment rate fell to 3.5% from 3.6% as more people searched for and found work. Wage growth continues to moderate as hourly wages increased a mild 0.3% in March, a positive sign for the Federal Reserve. In Europe, the European Central Bank (ECB) indicated that further interest rate hikes will be required to combat inflationary pressures.

See it by the numbers.

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