Stock benchmark indexes closed lower for the second straight week. The war in Ukraine continued, with Ukraine’s top diplomat indicating he saw no progress in talks with Russia. Inflation continued to run hot ahead of this week’s Federal Reserve meeting. During the week, markets oscillated between panic selling and dip buying. And the volatility wasn’t restricted to stocks — crude oil prices and bond yields also swung higher and lower. By the end of the week, the Nasdaq, the S&P 500, and the Dow fell the furthest. Crude oil prices dipped about $5.00 per barrel. Gold prices rose nearly 1.0%. The dollar inched higher, while 10-year Treasury yields added 28 basis points.
Last Week’s Economic News
- Inflationary pressures continued to advance in February. The Consumer Price Index rose last month after increasing in January as well.
- The report on international trade in goods and services out March, 8 for January, revealed that the trade deficit rose 9.4%, which was more than offset by a 1.2% increase in imports. Year over year, the goods and services deficit increased $24.6 billion, or 37.7%, from January 2021. Exports increased $29.9 billion, or 15.4%. Imports increased $54.4 billion, or 21.0%.
- According to the latest report from the United States Treasury, the government deficit for February was $216.6 billion, well above the January surplus of $118.7 billion. Through the first five months of the fiscal year, the total deficit was $475.6 billion, significantly lower than the $1,046.7 trillion deficit over the same period in the previous fiscal year.
- There were 11.3 million job openings in January, little changed from the previous month’s total, according to the latest information from the Bureau of Labor Statistics.
- The national average retail price for regular gasoline was $4.102 per gallon on March 4, $0.494 per gallon more than the prior week’s price and $1.331 higher than a year ago.
- For the week ended March 5, there were 227,000 new claims for unemployment insurance, an increase of 11,000 from the previous week’s level.
Eye on the Week Ahead
Some extremely important, potentially market-moving economic information is available this week, beginning with the highly anticipated meeting of the Federal Open Market Committee. A few weeks ago, much of the focus was on escalating inflation likely attributable to labor shortages and backlogs caused by rapidly expanding economic growth. The war in Ukraine has impacted not only inflation, but the global economy as well. How the FOMC responds is up to speculation, although Federal Reserve Chair has indicated that he would probably favor a 25-basis-point increase to the federal funds rate.
Have a nice week!
Sincerely,
Robert G. Carpenter