Stocks Notch Third Straight Day of Gains…..
U.S. equities ended the day broadly higher, after rallying in the afternoon and marking the third straight day of gains, as the ongoing geopolitical concerns remained elevated and as investors continued to digest the Fed’s move to embark on its rate-hike campaign. As talks continued between Russian and Ukraine, investors appeared to have tempered their optimism of a near-term resolution, but some hope for the ceasefire persists. News on the equity front was focused on earnings from some retailers, notably Williams-Sonoma and Dollar General. The economic calendar was busy, with initial jobless claims falling and housing starts surprising to the upside, while industrial production matched expectations and the Philly Fed Manufacturing Business Outlook showed surprising acceleration further into expansion territory. Treasuries were mixed, with the yield curve steepening, after rates on the short end jumped following the Fed’s decision yesterday. The U.S. dollar remained in a downtrend, while gold and crude oil prices were sharply higher. Europe finished mixed, as investors processed the Fed decision out of U.S., Eurozone CPI accelerated and as geopolitical concerns persisted, while Asia finished broadly higher, with markets in China and Hong Kong continuing to rebound.
The Dow Jones Industrial Average rose 418 points (1.2%) to 34,481, while the S&P 500 Index gained 54 points (1.2%) to 4,412, and the Nasdaq Composite increased 178 points (1.3%) to 13,615. In heavy volume, 4.9 billion shares of NYSE-listed stocks were traded, and 5.5 billion shares changed hands on the Nasdaq. WTI crude oil gained $7.94 to $102.98 per barrel. Elsewhere, the gold spot price traded $27.90 higher to $1,937.10 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was down 0.6% at 97.98.
Initial jobless claims came in at a level of 214,000 for the week ended March 12, versus estimates calling for 220,000, and below the prior week’s upwardly-revised 229,000 level. The four-week moving average fell by 8,750 to 223,000, and continuing claims for the week ended March 5 decreased by 71,000 to 1,419,000, versus estimates of 1,450,000. The four-week moving average of continuing claims fell by 42,500 to 1,463,000.
Housing starts for February jumped 6.8% month-over-month (m/m) to an annual pace of 1,769,000 units, above forecasts of 1,700,000 units, and compared to January’s upwardly-revised pace of 1,657,000 units. However, building permits, one of the leading indicators tracked by the Conference Board as it is a gauge of future construction, declined by 1.9% m/m to an annual rate of 1,859,000, north of expectations calling for 1,845,000 units, and compared to the downwardly-revised 1,895,000 unit pace in January.
The Philly Fed Manufacturing Business Outlook Index accelerated more than expected, moving further into expansion territory (a reading above zero) for March. The index rose to 27.4 versus estimates of a decrease to 14.5 from February’s 16.0 level. New orders and shipments grew at a faster pace, and employment growth accelerated, while prices paid increased and continued to expand at a severely elevated pace.
The Federal Reserve’s report on industrial production showed a 0.5% m/m increase in February, matching estimates, and compared to January’s unrevised 1.4% increase. The Fed said manufacturing output and mining production rose, while utilities declined amid a return to more seasonable weather after surging in January as the demand for heating jumped with significantly colder-than-normal temperatures. Capacity utilization nudged higher to 77.6% from the prior month’s downwardly-adjusted 77.3% rate, versus forecasts of an increase to 77.9%.
Treasuries were mixed and the yield curve steepened, after seeing some pressure yesterday as the Federal Reserve expectedly raised its target for the fed funds rate by 25 basis points (bps) to a range of 0.25% to 0.50%, its first rate hike since 2018.
©2022 Charles Schwab & Co., Inc. All rights reserved. Member SIPC.
Schwab Center for Financial Research (“SCFR”) is a division of Charles Schwab & Co., Inc. The information contained herein is obtained from third-party sources and believed to be reliable, but its accuracy or completeness is not guaranteed. This report is for informational purposes only and is not a solicitation, or a recommendation that any particular investor should purchase or sell any particular security. The investment information mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinions are subject to change without notice in reaction to shifting market conditions.