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Weekly Recap | February 21, 2023

Weekly Recap | February 21, 2023

February 21, 2023
Weekly Recap

February 13-17, 2023 Recap

Equities End Mixed

S&P 500 Slips Second Week
U.S. equity indices ended narrowly mixed last week amid renewed inflationary concerns that will likely keep Fed policymakers postured to keep interest rates higher-for-longer. Investor sentiment waned after learning January consumer and producer prices rose beyond forecasts last month, while retail sales rose 3.0%, well ahead of the 1.7% consensus forecast.

For the Week…
The S&P 500 fell 0.20%, the Dow Jones Industrial Average dipped 0.13% while the tech-heavy Nasdaq Composite gained 0.63%. Mid cap (+0.61%) and small cap (+1.47%) stocks outperformed.

CPI Disappoints
Inflation, as measured by the consumer price index (CPI), rose 0.5% in January. Core CPI, which excludes food and energy, increased 0.4%. On a yearly basis, CPI slowed narrowly to 6.4% but came in higher than expected (6.2%). Inflationary pressures are easing, but not as fast as the Fed and investors had hoped.

Consumer Discretionary is Top Outperformer
Six of the 11 major S&P 500 sector groups ended negative last week, with Energy (-6.46%), Real Estate (-1.26%) and Materials (-0.91%) falling the most. Consumer Discretionary (+1.66%) led among outperformers, followed by Utilities (+1.14%) and Consumer Staples (+0.94%). On a YTD basis, Consumer Discretionary (+16.49), Communications Services (+13.39%) and Technology (+12.48%) are the top 2023 gainers.

Treasury Yields Climb
Treasury yields advanced a second week, with the yield on benchmark 10-year notes ending Friday at 3.831%, up nearly ten basis points (0.10%). After surging 8.6% the week prior, U.S. WTI crude oil futures backpedaled 1.93% to close last Friday at $76.55/barrel.

The Latest from @CeteraIM

Leading Indicators Fall for a Tenth Straight Month

Early Year Volatility is Above Norm

S&P 500 Forward P/E is Still Elevated

Economic Calendar

Monday, February 20
Washington’s Birthday. All Markets Closed.

Tuesday, February 21
S&P Global U.S. Manufacturing/Services PMIs, Existing Home Sales.

Wednesday, February 22
Mortgage Activity, FOMC Policy Meeting Minutes.

Thursday, February 23
Jobless Claims, 4Q GDP Revision, Chicago Fed National Activity.

Friday, February 24
Personal Income/Spending, PCE Prices, New Home Sales, Consumer Sentiment.

Consumer spending at bars and restaurants was a big driver of strong retail sales growth in January. Dining out spending jumped 7.2% last month, pushing year-over-year growth to 25.2%. For context, the record high before the pandemic was 10.8% year-over-year in June 1993. There is still a lot of pent-up demand for dining out.

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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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.