Weekly Market Commentary: March 26 – April 1
2023 is 25% done
Goodbye, Q1 and hello, Q2. After dropping in early March, markets ended the month — and the first quarter — on an upward swing. Boosting the market’s mood: A key gauge of U.S. inflation rose last month but by a less-than-expected amount. The personal consumption expenditures (PCE) price index rose 0.3% in February, excluding food and energy. The number suggests consumer spending has stabilized and may be a sign the Federal Reserve may be close to ending its aggressive cycle of interest rate hikes.
However, employment — which the Fed wants to see weaken before pausing hikes — remains mostly strong. Worker filings for unemployment benefits rose last week but were still historically low. The unemployment rate, which has stayed between 3.4% and 3.7% for 12 months, is forecasted to stay in that range when new numbers come out later this week. Hiring has been strong this year, especially at restaurants and retailers. But is there a change coming? McDonald’s Corp. announced it will temporarily close corporate offices and begin layoffs this week, just two days after the McRetailer’s shares closed at record highs.
In other data news, average home prices declined in January from the prior month, as increased mortgage rates continued to slow the housing market. And while spring is generally the busiest season for would-be buyers and sellers, mortgage rates in the high-6% range likely means we won’t see a homebuying frenzy anytime soon.
Shipping and handling
Remember how expensive it was for producers and retailers to ship inventory just a year ago? The price of shipping by ocean containers tumbled in the first quarter by almost 90%. Retailers stocked up on inventory in early 2022, when the price of shipping got sky-high, and it took forever to get inventory. Now they have too much stock, and ocean carriers are struggling to fill space. Lower shipment prices mean potentially lower prices for consumers, although most of the costs will apply to goods sold in late summer or fall.
Coming this week
Will they or won’t they pause rate hikes? Several Fed officials are scheduled to speak this week, and their every word will be dissected to see which way the Fed is leaning ahead of their next meeting in early May.
The ADP employment report for March will come out on Wednesday, followed by the nonfarm payrolls number on Friday. Both are forecasted to be lower than February: ADP is forecasting the addition of 210,000 jobs, while the payrolls report is expected to come in at +235,000. We’ll also get job openings on Tuesday of this week, forecasted to drop only slightly from 10.8 million to 10.5 million.
Other data is light this week. We’ll see construction spending for February (Monday), factory orders (Tuesday) and average hourly wages (Friday).
If you have any questions or concerns regarding this week's market update, please don't hesitate to get in contact with our team. We are available to meet virtually or face-to-face. Schedule a meeting using our online calendar or call our team at (909) 330-0074.
All the best!
The Sears Wealth Management Team
Michael, Seth, Chase, Haley, Hilary and Krysten
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