Weekly Market Update: Recap of Stocks, Bonds, and Commodities Amidst Inflation and Geopolitical Concerns
Market Overview:
Stocks faced challenges this week amidst concerns over consumer inflation, rising interest rates, and geopolitical tensions in the Middle East. Earnings reports from major banks like JPMorgan Chase and Wells Fargo disappointed investors, although Apple's announcement of AI-focused processors boosted the tech sector. The S&P 500 closed down over 1%, slipping below key support levels, with small caps notably underperforming. All S&P 500 sectors ended lower, with financials hit particularly hard due to concerns over Morgan Stanley's anti-money laundering practices.
In the bond market, the Bloomberg Aggregate Bond Index saw losses as Treasury yields climbed on inflation data. However, Treasuries rallied towards the end of the week amid geopolitical uncertainty.
Commodities remained relatively flat despite a stronger dollar, with metals performing well despite oil prices dipping on overbought conditions and a bearish demand outlook from the International Energy Agency (IEA). The threat of Iranian escalation in Israel added to supply concerns.
Federal Reserve Insights and Economic Roundup:
March's Consumer Price Index (CPI) showed inflation maintaining its pace, driven by rising gas prices and shelter costs. Annual inflation accelerated to 3.5%, with indications that inflation pressures may persist longer than expected. The University of Michigan's sentiment report highlighted consumer concerns over household finances and future spending, potentially signaling a shift to a more defensive stance. Investors are advised to monitor upcoming earnings reports from luxury retailers for insights into consumer health.
The Week Ahead:
Next week's economic calendar includes key data releases:
- Monday: Retail Sales for March
- Tuesday: Housing Starts and Building Permits for March, along with Fed Chair Jerome Powell's Q&A session
- Wednesday: Federal Reserve Beige Book release
- Thursday: Weekly initial and continuing unemployment claims, Leading Index for March, Existing Home Sales for March