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March Monthly Market Insight

| March 09, 2023
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Monthly Market Insights | March 2023

U.S. Markets

Stock prices stumbled in February owing to growing worries that the Fed would maintain its tight monetary posture in the face of continuing inflation.

For the month, the Dow Jones Industrial Average lost 4.19 percent, whereas the Standard & Poor’s 500 Index fell 2.61 percent. The Nasdaq Composite, up nearly 11 percent in January, dipped 1.11 percent.1

quotation mark icon

In the business world, unfortunately, the rear-view mirror is always clearer than the windshield.

Warren Buffett, American business magnate, investor, and philanthropist

Strong Start Stumbled

The month began the way January ended–with stocks climbing higher on solid earnings reports and encouraging inflation data. The markets enthusiastically greeted the Fed’s 25-basis-point hike in interest rates, relieved that the increase was in line with expectations. Spirits were further lifted by constructive comments made by Fed Chair Jerome Powell following the rate hike announcement.

The optimism did not last long, however. Stocks struggled as the direction of future monetary policy weighed on investors throughout the month.

Uncertainty with Interest Rates

Despite an initial upbeat assessment by Powell at the post-meeting press conference, a strong employment report fanned fears that the Fed would be unable to pause rate hikes anytime soon.2

By mid-month, a higher-than-expected increase in consumer prices, strong retail sales numbers, and a rise in producer prices made it clear that the Fed would need to remain vigilant.

Stocks' Slide Continued

The slide in stock prices continued into the end of the month, dragged down by further rate hike concerns and disappointing guidance from two major retailers that called into question consumer health. Stocks felt even more pressure after January’s Personal Consumption Expenditures (PCE) price index—the Fed’s preferred benchmark for gauging inflation—reflected hotter-than-expected price increases and vigorous consumer spending.2

Sector Scorecard

One silver lining regarding the difficult month was that the technology sector, one of the worst-performing groups in 2022, notched a slight gain of 0.41 percent.

The remaining sectors retreated, however, including industrials (−0.86 percent), communications services (−2.87 percent), consumer discretionary (−2.13 percent), consumer staples (−2.32 percent), energy (−6.94 percent), financials (−2.22 percent), health care (−4.64 percent), materials (−3.33 percent), real estate (−5.86 percent), and utilities (−5.92 percent).3

U.S. Market Recap for February 2023MMI logo
S&P 500
red down arrow-2.61
Month (%)
gren up arrow3.40
Year-to-Date (%)
Nasdaq
red down arrow-1.11
Month (%)
green up arrow9.45
Year-to-Date (%)
Russell 1000
red down arrow-2.55
Month (%)
green up arrow3.89
Year-to-Date (%)
10-Year Treasury
green up arrow3.92
Month (%)
green up arrow0.04
Year-to-Date (%)
Yahoo Finance, February 28, 2023. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid.

What Investors May Be Talking About in March

The Federal Open Market Committee (FOMC) is scheduled to meet on March 21–22, and the Fed at its previous meeting indicated that it intends to raise short-term interest rates by another 0.25 percent.4

However, the Fed will now need to digest fresh information on the labor market and inflation that may impact its upcoming rate decision.

Fed Chair Powell in Focus

Investors will be keenly parsing the FOMC meeting announcement accompanying the FOMC’s decision while also paying close attention to comments by Fed Chair Powell, who will hold a press conference immediately following the meeting announcement.

In the Fed’s previous meeting, Powell acknowledged that a disinflationary trend has emerged, but he also cautioned that the Fed will evaluate the labor market and new inflation data for further guidance.

As such, it may be more Powell’s comments, rather than the expected rate hike, that move markets and set the tone for the weeks to follow.

World Markets

The prospect of higher rate hikes in Europe—and questions about the pace of China’s reopening—sent overseas stocks lower in February, with the MSCI-EAFE Index slipping 2.07 percent.5

European markets were higher, with Spain, Italy, and France leading the way. Germany picked up 1.57 percent, and the U.K. tacked on 1.35 percent.6

Pacific Rim markets trended lower, with China’s Hang Seng index dropping 9.41 percent and Australia’s ASX 200 falling 2.92 percent.7

World Market Recap for February 2023
EMERGING MARKETSFEBRUARY (%)YEAR-TO-DATE (%)
Hang Seng (China)red down arrow-9.41green up arrow0.02
KOSPI (Korea)red down arrow-0.50green up arrow7.89
Nikkei (Japan)green up arrow0.43green up arrow5.18
Sensex (India)red down arrow-0.99red down arrow-3.09
EGX 30 (Egypt)green up arrow3.38green up arrow16.46
Bovespa (Brazil)red down arrow-7.57red down arrow-4.63
IPC All-Share (Mexico)red down arrow-3.31green up arrow8.86
ASX 200 (Australia)red down arrow-2.92green up arrow3.12
EUROPE  
DAX (Germany)green up arrow1.57green up arrow10.35
CAC 40 (France)green up arrow2.62green up arrow12.27
IBEX 35 (Spain)green up arrow3.99green up arrow14.16
FTSE 100 (United Kingdom)green up arrow1.35green up arrow5.70
IT40 (Italy)green up arrow3.46green up arrow15.91
Yahoo Finance, February 28, 2023. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

Indicators

Gross Domestic Product (GDP)

Economic growth in the fourth quarter was revised lower to 2.7 percent from its initial estimate of 2.9 percent. The downward revision was primarily attributable to lower consumer spending than originally estimated.8

Employment

New hires in January surged by 517,000, sending the unemployment rate to a 53-year low at 3.4 percent. Despite the robust job gains, wage growth remained below inflation, rising 4.4 percent from the previous January. The labor force participation rate slightly rose to 62.4 percent.9

Retail Sales

Consumer spending rebounded in January, climbing 3.0 percent. Retail sales exceeded estimates, coming off two consecutive months of declines.10

Industrial Production

Industrial production was unchanged in January, dragged down by a drop-off in utilities output owing to an unseasonably warm January. Manufacturing and mining increased production after two months of decline, rising 1.0 percent and 2.0 percent, respectively.11

Housing

Housing starts dropped by 4.5 percent, with single-family home starts declining 4.3 percent. Year-over-year housing starts tumbled 21.4 percent.12

Sales of existing homes lost 0.7 percent from a month ago, falling to the lowest level in more than 12 years. Year-over-year sales declined by 36.9 percent.13

New home sales rose 7.2 percent, the highest rate in nearly a year. The unexpected increase was the result of a surge in sales in the South, with all other regions experiencing declining sales.14

Consumer Price Index (CPI)

Consumer prices firmed in January, rising 0.5 percent. The gain was an increase from the prior month and higher than consensus estimates. However, the year-over-year increase of 6.4 percent came in below the prior month’s 12-month rise of 6.5 percent—the seventh consecutive month of year-over-year declines. Core inflation (which excludes energy and food) was 0.4 percent, whereas the year-over-year increase was 6.4 percent, a tick lower than December’s 6.5 percent year-over-year read.15

Durable Goods Orders

Durable goods orders declined 4.5 percent largely owing to a comparison anomaly in which a historically large order for aircraft was booked in December, leading to a month-over-month drop. Excluding transportation, orders were up 0.7 percent.16

The Fed

The minutes from the last meeting of the FOMC indicated that nearly all members favored the decision to raise rates by a quarter percentage point.

However, some Fed governors indicated they were inclined to vote for, or would have also voted for, a 0.50 percent hike to more quickly achieve the Fed’s target range for short-term interest rates.

The minutes also suggested that the Committee may hike rates by a quarter percentage point at its next meeting, which is scheduled for March 21–22.17

By the Numbers: Women’s History Month

198718

Year Congress formally established Women’s History Month

February 28, 190918

Original establishment of International Women’s Day

March 818

Current celebration of International Women’s Day

August 18, 192019

Ratification of the 19th amendment, giving women the right to vote

164.8 million20

Number of women in the United States

2:120

Ratio of women to men, ages 85 and older

$10 trillion21

Current amount of wealth women control

$30 trillion21

Projected amount of wealth expected to be controlled by women in 2032

53 percent21

Percentage of women currently investing in ESG funds

67 percent22

Percentage of women investing outside of retirement

86 percent22

Percentage of women less stressed by outsourcing their investments to a professional


 

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite, LLC, is not affiliated with the named representative, broker-dealer, or state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.

Investing involves risks, and investment decisions should be based on your own goals, time horizon and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

Any companies mentioned are for illustrative purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, timeframe, and risk tolerance.

The forecasts or forward-looking statements are based on assumptions, subject to revision without notice, and may not materialize.

The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.

The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. The S&P 500 Composite Index is an unmanaged group of securities considered to be representative of the stock market in general. The Nasdaq Composite is an index of the common stocks and similar securities listed on the Nasdaq stock market and considered a broad indicator of the performance of stocks of technology and growth companies. The Russell 1000 Index is an index that measures the performance of the highest-ranking 1,000 stocks in the Russell 3000 Index, which is comprised of 3,000 of the largest U.S. stocks. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark for the performance in major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. Index performance is not indicative of the past performance of a particular investment. Past performance does not guarantee future results. Individuals cannot invest directly in an index. The return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost.

International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

The Hang Seng Index is a benchmark index for the blue-chip stocks traded on the Hong Kong Stock Exchange. The KOSPI is an index of all stocks traded on the Korean Stock Exchange. The Nikkei 225 is a stock market index for the Tokyo Stock Exchange. The SENSEX is a stock market index of 30 companies listed on the Bombay Stock Exchange. The Jakarta Composite Index is an index of all stocks that are traded on the Indonesia Stock Exchange. The Bovespa Index tracks 50 stocks traded on the Sao Paulo Stock, Mercantile, & Futures Exchange. The IPC Index measures the companies listed on the Mexican Stock Exchange. The MERVAL tracks the performance of large companies based in Argentina. The ASX 200 Index is an index of stocks listed on the Australian Securities Exchange. The DAX is a market index consisting of the 30 German companies trading on the Frankfurt Stock Exchange. The CAC 40 is a benchmark for the 40 most significant companies on the French Stock Market Exchange. The Dow Jones Russia Index measures the performance of leading Russian Global Depositary Receipts (GDRs) that trade on the London Stock Exchange. The FTSE 100 Index is an index of the 100 companies with the highest market capitalization listed on the London Stock Exchange.

Please consult your financial professional for additional information.

Copyright 2023 FMG Suite.

1. WSJ.com, February 28, 2023

2. FoxBusiness.com, February 24, 2023

3. SectorSPDR.com, February 28, 2023

4. CMEGroup.com, February 28, 2023

5. MSCI.com, February 28, 2023

6. MSCI.com, February 28, 2023

7. MSCI.com, February 28, 2023

8. WSJ.com, February 23, 2023

9. CNBC.com, February 3, 2023

10. WSJ.com, February 15, 2023

11. FederalReserve.gov, February 15, 2023

12. Reuters.com, February 16, 2023

13. CNBC.com, February 21, 2023

14. Bloomberg.com, February 24, 2023

15. WSJ.com, February 14, 2023

16. Morningstar.com, February 27, 2023

17. WSJ.com, February 22, 2023

18. Today.com, March 3, 2022

19. Archives.gov, February 8, 2022

20. Census.gov, March 1, 2022

21. CNBC.com, May 3, 2022

22. Fidelity.com, 2021

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