Weekly Market Recap

Stocks staged a strong rebound last week that was only briefly interrupted (for about an hour) by the start of the Fed’s rate hiking cycle. Most US benchmarks were up at least 5%, while an even sharper rally in growth stocks pushed the Nasdaq higher by more than 8%. Only the energy sector failed to deliver positive returns. International stocks also finished higher, with Chinese equities staging a dramatic reversal after authorities pledged to support a rapidly falling market.

Treasury yields moved higher leading up to the FOMC’s well-telegraphed Fed Funds rate decision. By week’s end, futures markets were pricing in a total of seven additional 25bp hikes by the end of the year, implying a Fed Funds target rate floor of 2.0%. Meanwhile, credit spreads moved tighter as equities rallied, driving small price gains in corporate bonds despite the move higher in rates.

Commodity prices finished lower for the second straight week on volatile day-by-day moves. Oil fell nearly $15/barrel through Wednesday’s close before rebounding sharply later in the week on renewed fears of tight supplies. Nonenergy commodities followed a similar pattern.

Economic data continued to point to a strong economy and high inflation last week. Residential housing starts and new building permits were very strong, unemployment claims remained low, and the Conference Board’s Leading Economic Index (LEI) gained 0.3% in February despite the invasion. Meanwhile, various indicators of inflation remained in the double digits on a y/y basis, including PPI (+10.0%), import prices (+10.9%), and export prices (+16.6%).