In Markets "In a Nutshell"

Markets “In a Nutshell” for April 3, 2023

Investment Week at a Glance

Stocks finished higher for the week.  The Dow Jones Industrial Average rose 3.20%, the S&P 500 was up 3.5%, and the NASDAQ rose 3.40%. Foreign stocks (MSCI EAFE) were also up, rising 3.3%. Bond prices were down for the week, with the 10-year U.S. Treasury ending the week at 3.47%.  (Data source: Wall Street Journal)

Markets Close Q1 on a High Note

Markets had a strong week as all major indices were up by over 3% to close out the quarter. This also put all major indices positive for the quarter as the Dow barely squeaked out a gain of 0.4%. The S&P 500 was up over 7% for the first quarter and the NASDAQ was the leader with a nearly 17% gain for the quarter. The market has been resilient despite the banking worries we have seen over the past few weeks. Although the financial sector has been hit hard this quarter due to the few bank closures we have seen, the overall market was able to stay strong as tech has led the way. This is why it is always important to be well diversified and not put all your eggs in one basket as a couple of events could send a sector down 10%-20% in a month as we saw with the banks.

Looking Ahead

Both equity and fixed income finished the first quarter positive despite the challenges that faced the market such as inflation, the Fed raising rates, and the banking scare. The market will continue to face the challenges of the Fed and inflation, but many believe the Fed is close to pausing rate hikes which could help the market as that has been the main question for investors for the past few months. Inflation also has continued to come down to 6%, still far from the 2% target rate. If we see inflation continue to fall throughout the year and the Fed pauses and possibly even cuts rates by the end of the year, this could give the market a boost. If we see the opposite and inflation stays around 6%, the Fed would be forced to raise rates more which could cause more damage to the economy which would lead to a downturn for the market.

Quiz:

Quiz

Regional bank stocks were hit the hardest from the fallout of the bank closures we saw, how much have they fallen since March 8th, the start of the banking scare? (Scroll Down for Answer)

  1.    -5%
  2.    -8%
  3.    -13%
  4.    -18%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Answer below.

 

 

Have a Great Week!

 

 

 

 

 

 

 

 

 

Answer:

4)    -18%.  The regional banks took the worst of the hit when we saw the few bank closures as there was worry that people would pull their money out of the small regional banks and go to the large national banks, who are thought to be “too big to fail”. These worries have seemed to have gone away for now as there has not been any more bank closures and things have seemed to stabilize.