Weekly Recap | March 11, 2024

March 4 - 8, 2024 Recap

Equities Weaken Last Week

Small Cap Rebound Continues
All three major U.S. equity indices finished modestly negative last week amid a 1% pullback within the Technology sector. Wall Street was also parsing through Friday’s nonfarm payrolls report that revealed some conflicting signals as to the timing outlook for when Fed policymakers will begin to ease interest rates. New jobs added in February widely topped forecasts, however the unemployment rate climbed to 3.9%. There were no surprises during Fed Chairman Powell’s required Congressional testimony last week. Utility sector companies were the biggest winners last week, up 3.3%.

For the Week…
Despite reaching its 16th all-time high on Thursday, the S&P 500 ended the week off 0.23%, trimming its near 1% gain the week prior. The Dow Jones Industrial Average fell 0.85%, and the tech-heavy Nasdaq Composite fell 1.15%. The small cap focused Russell 2000 Index gained 0.34% to extend its 3% rebound the week prior.

Wage Growth Eases
Friday’s nonfarm payrolls report contained a pleasing inflation data insight. Average hourly earnings growth slowed from 5.9% Y/Y in March 2022 when the Fed began hiking rates, to 4.3% Y/Y last month. A disinflationary trend we anticipate continuing as labor market dynamics normalize. Slowing wage growth eases inflationary pressures.

Weekly Sector Insights
Just three of the 11 major sector groups posted declines last week, including Consumer Discretionary (-2.53%), Technology (-1.07%), and Communication Services (-0.64%). Utilities (+3.31%), Materials (+1.63%), and Real Estate (+1.55%) led the advance in the remaining eight sectors, with Industrials (+0.66%) and Healthcare (+0.08%) gaining the least. Year-to-date, leadership remains intact with Technology (+11.27%) and Communication Services (+10.86%) continuing to top the 2024 leaderboard.

Treasury Yields Ease
The yield on 10-year Treasury notes continued to trend lower, ending Friday at 4.083%, down 0.10% from the week prior. The yield on policy-sensitive 2-year Treasury notes shed just 0.03% on the week, finishing at a fresh three-week low of 4.480%. For the week, the U.S. Dollar Index weakened over 1% while gold futures surged 4.2% to a new all-time high above $2,185/oz.

The Latest from @CeteraIM

Sector Returns Since October Low

Job Gains Top Forecasts

Services Activity Softens

Economic Calendar

Monday, March 11
No Major Releases.

Tuesday, March 12
Small Business Optimism, Consumer Price Index (CPI), U.S. Federal Budget.

Wednesday, March 13
Mortgage Activity.

Thursday, March 14
Jobless Claims, Retail Sales, Producer Price Index (PPI), Business Inventories.

Friday, March 15
Empire State Manufacturing, Import/Export Prices, Industrial Production, Advance Consumer Sentiment.

The labor market expanded more than expected last month. Nonfarm payrolls increased by 275,000, outpacing expectations for a 200,000 increase. Although the unemployment rate increased from 3.7% to 3.9%, it extended the streak of monthly readings below 4.0% to 25 months. It's the longest since the late 1960s, which saw 27 straight months below 4.0%.

^{This report is created by Cetera Investment Management LLC. For more insights and information from the team, follow @CeteraIM on Twitter.}

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^{No independent analysis has been performed and the material should not be construed as investment advice. Investment decisions should not be based on this material since the information contained here is a singular update, and prudent investment decisions require the analysis of a much broader collection of facts and context. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The opinions expressed are as of the date published and may change without notice. Any forward-looking statements are based on assumptions, may not materialize, and are subject to revision.}

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^Glossary

^{The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ.}

^{The S&P 500 is an index of 500 stocks chosen for market size, liquidity and industry grouping (among other factors) designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe.}

^{The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad based index.}

^{The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe and is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.}

^{The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.}

^{The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe and is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership.}

^{The Bloomberg US Aggregate Bond Index, which was originally called the Lehman Aggregate Bond Index, is a broad based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government–related and corporate debt securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency) debt securities that are rated at least Baa3 by Moody’s and BBB- by S&P. Taxable municipals, including Build America bonds and a small amount of foreign bonds traded in U.S. markets are also included. Eligible bonds must have at least one year until final maturity, but in practice the index holdings have a fluctuating average life of around 8.25 years.}

^{The Bloomberg US Corporate High Yield Index measures the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt. Payment-in-kind and bonds with predetermined step-up coupon provisions are also included. Eligible securities must have at least one year until final maturity, but in practice the index holdings has a fluctuating average life of around 6.3 years.}

^{The Bloomberg US Municipal Bond Index covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds. Eligible securities must be rated investment grade (Baa3/BBB- or higher) by Moody’s and S&P and have at least one year until final maturity.}

^{The MSCI EAFE Index is designed to measure the equity market performance of developed markets (Europe, Australasia, Far East) excluding the U.S. and Canada. The Index is market-capitalization weighted.}

^{The MSCI Emerging Markets Index is designed to measure equity market performance in global emerging markets. It is a float-adjusted market capitalization index.}

^{The Bloomberg Commodity Index is a broadly diversified index that measures 22 exchange-traded futures on physical commodities in five groups (energy, agriculture, industrial metals, precious metals, and livestock), which are weighted to account for economic significance and market liquidity. No single commodity can comprise less than 2% or more than 15% of the index; and no group can represent more than 33% of the index.}

^{The S&P GSCI Crude Oil Index is a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market.}

^{The S&P GSCI Gold Index, a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark tracking the COMEX gold futures market.}

^{The U.S. Dollar Index is a weighted geometric mean that provides a value measure of the United States dollar relative to a basket of major foreign currencies. The index, often carrying a USDX or DXY moniker, started in March 1973, beginning with a value of the U.S. Dollar Index at 100.000.}