Last trading week review

On Friday, the S&P 500 Index dropped to its lowest intraday level since January 5th. In comparison to large-cap stocks, small-cap stocks performed worse, and value stocks experienced a greater decline than their growth counterparts. As a result, the Russell 1000 Value Index closed in the red for the year-to-date period. S&P 500 fell to its lowest level since early January.

S&P cw10 S&P 500 daily candles, SMA 50 (red) , SMA 200 (Green)

Nasdaq cw10 Nasdaq daily candles, SMA 50 (red) , SMA 200 (Green)

Weekly market stats

Index Closed at Week Change YTD %
S&P 500 3862 -4.5% -3.7%
Dow Jones Industrial Average 31910 -4.4% 0.74%
Nasdaq Composite 11139 -4.7% 5.4%
US10Y 3.70 -25.42% -17.41%
US20Y 3.91 -25.0% -40.82

Jerome Powell testimony

As we pointed to in a last week Jerome Powell gave a scheduled testimony to Congress. Powell struck a hawkish tone, suggesting that the course of interest-rate increases could steepen and last longer than expected if inflation remains high. His comments weighed on stocks Tuesday, as they marked a shift from recent expectations for a pause in rate hikes.

After his speech the markets have raised their expectations for the peak fed funds rate, with the anticipated range shifting to a range closer to 5.5%-5.75%. Initially, we expected the Fed to pause once it reached the range of 5.0%-5.25% at the start of this year. However the Silicon Valley Bank news arrived at the end of the week…

Silicon Valley Bank worries

Last week, the markets were hit with an extra dose of anxiety due to the news that Silicon Valley Bank (SVB) in California had been closed down as a result of losses in its asset portfolio and an inability to secure the necessary funding to maintain adequate capital. Although a bank failure can immediately bring back memories of the 2008 financial crisis, we believe that making similar comparisons at this stage would be premature and unjustified.

As a consequence the whole banking sector fell sharp

KBE SPDR S&P Bank ETF. Daily Candles

The whole situation resulted in massive US Treasures yield drop as a lot if market participant looking for most secure assets.


Monetary stats

Rates Value (%)
Fed Funds rate (target) 4.50-4,75
EFFR 4.57
Fed Discount Rate 4,75
Prime rate 7,75

Employment conditions

The labor market remains historically tight, supporting consumer spending. However unemployment rate had risen to 3.6%.

Outlook for the next week

We trying some outlook. The week will begin volatile, it is expected that there will be further developments and concerns regarding the collapse of SVB Financial Group and its implications for the banking sector and venture capital ecosystem.

With the next Federal Reserve meeting quickly approaching, the consumer price index report for February is set to take center stage. It is expected that there will be a slight moderation in the year-over-year inflation rate, ranging from +5.5% to +5.6%. Additionally, producer prices are forecast to decelerate to a 0.3% month-over-month gain, compared to the 0.7% increase seen in January. Should the number look just any better than expectations combines with SVB Group worries it could lead to assumption that FED will go with 50 bp increase.

The current estimates have been very volatile this week and now markets seem to give more weight Powell’s hawkish speech rather than SVB news. I tend to not join this sentiment especially because labour market seem showed first weaknesses.

FED rate estimates

Next week events

Monday Tuesday Wednesday Thursday Friday
. Consumer Price Index Report Producer Price Index Report Weekly unemployment claims The Conference Board Leading Economic Index for the U.S.
. Export and import prices University of Michigan Index of Consumer Sentiment

Stocks to watch

Stocks to watch:

Symbol Interesting Price level Comment
ZIM close to $17
AAP $125 Seems to be underpriced. But don’t rush it’s not confirmed to be strong.
GT $10
DDOG $63 Below this becomes attractive. Watch SIVB news and banks. Don’t rush
LUMN $2,5 Check Lumen Technologies: Analyzing recent stock development
VZ $35,5 Good level for entry or short put strategy
PYPL $71
ZM $65
U $25
DIS $90
GOOG $90
GOLD $15
MMM $100
WBA $33
PFE $38
CVS $77
JNJ $150
TDOC $22

Please keep in mind This is not investment advice! Stay careful! Happy investments!