PAS Weekly Commentary

Hot Inflation Data and Consolidation Efforts Lead to Losses

The major indices settled with relatively modest declines this week.

Market participants received two inflation readings suggesting price pressures remain stubborn. Both the Consumer Price Index (CPI) and Producer Price Index (PPI) for February came in hotter than expected, but stocks seemed to large take this in stride.

The S&P 500 even reached a new record high on Tuesday following the hot CPI reading. This report didn't spook the market due to the notion that the largest factor in the increase -- the index for shelter -- will lessen in coming months. 

The relatively muted response in the stock market was due also to the notion that the Fed's policy decision on Wednesday may provide more clarity on how these reports factor into the Fed's thinking.

The Treasury market had a more pronounced response to the data. The 10-yr note yield jumped 21 basis points this week to 4.30% and the 2-yr note yield settled 23 basis points higher at 4.72%.

Other data this week included a February retail sales report that was a bit weaker than expected but still up nicely versus the prior month, and some initial and continuing jobless claims data that reflected ongoing strength in the labor market.

The modestly negative bias in the stock market was also related to a growing sense among some participants that stocks are due for a pullback.

Six of the 11 S&P 500 sectors logged declines. The rate-sensitive real estate sector was the worst performer by a decent margin, dropping 3.1%. The consumer discretionary sector was the next worst performer, declining 1.2%. Meanwhile, the energy sector saw the largest gain, jumping 3.7% and the materials sector registered a 1.5% gain. 

  • S&P 500: -0.1% for the week / +7.3% YTD
  • Nasdaq Composite: -0.7% for the week / +6.4% YTD
  • S&P Midcap 400: +1.0% for the week / +5.1% YTD
  • Dow Jones Industrial Average: UNCH for the week / +2.7% YTD
  • Russell 2000: -2.1% for the week / +0.6% YTD

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Past performance is not a guarantee of future results. Indices are unmanaged and one cannot invest directly in an index. Diversification does not guarantee investment returns and does not eliminate the risk of loss.

Data and rates used were indicative of market conditions as of the date shown and compiled by Opinions, estimates, forecasts, and statements of financial market trends are based on current market conditions and are subject to change without notice. References to specific securities, asset classes and financial markets are for illustrative purposes only and do not constitute a solicitation, offer, or recommendation to purchase or sell a security. S&P 500 Index is a market index generally considered representative of the stock market as a whole. The index focuses on the large-cap segment of the U.S. equities market. Each company’s security affects the index in proportion to its market value. NASDAQ Composite Index is a market value-weighted index that measures all NASDAQ domestic and non-U.S. based common stocks listed on the NASDAQ stock market. Dow Jones Industrial Average is a widely used indicator of the overall condition of the stock market, a price-weighted average of 30 actively traded blue chip stocks, primarily industrials, but also includes financial, leisure and other service-oriented firms. Russell 2000 Index measures the performance of the smallest 2,000 companies in the Russell 3000 Index of the 3,000 largest U.S. companies in terms of market capitalization. MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets.

Park Avenue Securities LLC (PAS) is a wholly owned subsidiary of The Guardian Life Insurance Company of America (Guardian). PAS is a registered broker/dealer offering competitive investment products, as well as a registered investment advisor offering financial planning and investment advisory services. PAS is a member of FINRA and SIPC.

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2024-171392 (Exp. 6/24)