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 500 daily candles, SMA 50 (red) , SMA 200 (Green)
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.
- On Friday, March 10, 2023, Silicon Valley Bank was closed by FDIC
As a consequence the whole banking sector fell sharp
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.
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 |
| CMCSA | $34 | |
| 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!