Happy Sunday! I'm writing this week's update from Scottsdale, AZ, where the family and I have spent the last few days enjoying the sunshine. Although we didn't get to go to Spring Training as we had originally planned for this trip, (and we are very thankful that the MLB lockout is over!), we did get to sneak in an ASU baseball game. With all the craziness that the world has been, it's nice to slow down every once in awhile and connect with the things and people you love. I hope you're taking the opportunity to do the same.
And now on to the recap of this week:
Week in Review: Oil prices decline but market too worried to care
The stock market started the week in a hole as oil prices flirted with $130 per barrel. Oil prices eventually cooled off, but the hole was too deep for the market to climb out of given the state of the economy.
The S&P 500 fell 2.9%, the Nasdaq Composite fell 3.5%, the Dow Jones Industrial Average fell 2.0%, and the Russell 2000 fell 1.1%.
The initial spike to $130 per barrel was in anticipation of the U.S. ban on Russian energy imports, which included oil, gas, and coal. On a related note, the UK and EU said they would phase out their Russian energy imports this year, but the UK said it was still exploring options for a ban on gas imports.
WTI crude futures ended the week at $109.10/bbl, which 5.4% lower versus last Friday. The S&P 500 energy sector still rose 1.9%, while the other ten sectors in the S&P 500 sectors ended in negative territory. The consumer staples (-5.8%) and information technology (-3.8%) sectors were the weakest performers.
Despite the retracement in oil, the fact of the matter was that the environment was still inflationary with oil up 45% for the year and total CPI up 7.9% year-over-year in February. That understanding fueled concerns about a slowdown in consumer spending and expectations for the Fed to hike rates more aggressively this year.
More erratic than oil this week was nickel, which soared at the London Metal Exchange (LME) on Tuesday, more than doubling at one point to exceed $100,000 per metric ton before the LME suspended trading for the day.
The Russia-Ukraine situation remained a frustrating one because one headline would lift the market's spirits only for the next headline to disappoint the market. Ceasefire talks between Russia and Ukraine broke down without any real progress, and the market didn't believe President Putin's claims that there was a positive shift in talks.
Treasury yields spiked despite the growth concerns telegraphed in the stock market, presumably because of inflation expectations and cash-raising efforts. That didn't help risk sentiment. The 2-yr yield rose 26 basis points to 1.75%, and the 10-yr yield rose 28 basis points to 2.00%.
Separately, Amazon.com (AMZN) was story stock after the company announced a 20-for-1 stock split and a $10 billion share repurchase authorization. AMZN shares were down 0.1% for the week. The other mega-caps performed terribly, evident by the 3.5% decline in the Vanguard Mega Cap Growth ETF (MGK).
| INDEX | STARTED WEEK | ENDED WEEK | CHANGE | % CHANGE | YTD % |
|---|---|---|---|---|---|
| DJIA | 33614.80 | 32944.19 | -670.61 | -2.0 | -9.3 |
| Nasdaq | 13313.44 | 12843.81 | -469.63 | -3.5 | -17.9 |
| S&P 500 | 4328.87 | 4204.31 | -124.56 | -2.9 | -11.8 |
| Russell 2000 | 2000.90 | 1979.67 | -21.23 | -1.1 | -11.8 |
As always, it is my pleasure to bring you this weekly update. If this or anything else is causing you pause or you would like further details, please feel free to reach out to me and we can schedule some time to chat.
Justin J. Long CFP®
Founder/Lead Advisor
Diazo Wealth Group
702-745-1800 Direct
702-278-6560 Cell
Upcoming Economic Calendar
Source: 1. FactSet
Source: Week in perspective provided by Briefing.com. Briefing.com offers live market analysis on their web site www.Briefing.com.
Source: https://www.schwab.com/resource-center/insights/content/schwab-market-update
The data provided is for informational purposes only and is not an endorsement of any security, mutual fund, sector, or index. The information contained here is not guaranteed as to accuracy or completeness. All economic and performance information is historical and does not guarantee future results.
The Dow Jones Industrial Average is a price-weighted index comprising 30 widely traded blue chip U.S. common stocks. The NASDAQ Composite Index is a market-value-weighted index of all common stocks listed on the NASDAQ stock exchange. The S&P 500 Index tracks the performance of 500 of the largest publicly traded companies in the United States. The MSCI Europe, Australasia, and Far East (EAFE) Index tracks the performance of publicly traded large- and mid-cap stocks of companies in those regions. The Cboe Volatility Index (VIX) shows the market’s expectation of 30-day volatility and is constructed using the implied volatilities of a wide range of S&P 500 Index options. Weekly and year-to-date figures for the VIX show percentage changes, not investment returns. The Russell 2000 Index tracks the performance of approximately 2,000 publicly traded small-cap companies in the United States. It is not possible to invest directly in an index.
The Treasury yield curve is derived from available U.S. Treasury securities trading in the market and is provided directly by the U.S. Federal Reserve. The spread measures the difference in yield between two government securities. A normal (positive) yield curve occurs when longer-term rates are higher than shorter-term rates. The opposite holds true for an inverted yield curve. Year-to-date changes in U.S. Treasury bond yields are shown in basis points (bps). One hundred basis points equals one percent.
Oil prices are represented by West Texas Intermediate (WTI) crude oil.
The G20 countries comprise a mix of the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85% of global gross domestic product, and over 75% of global trade.
Innovative Adviser Solutions, LLC, a registered investment adviser, dba Diazo Wealth