Equities Post Biggest Weekly Gain Since November 2020…..
U.S. equities closed higher, and in the process extended a three-day run of gains that enabled the markets to post one of their best weeks since November 2020. The Information Technology sector helped set the pace for stocks on the day and helped the tech-heavy Nasdaq to lead the major U.S. indices. The ongoing developments surrounding the war in Ukraine remained at the forefront for investors after President Biden and Chinese President Xi spoke earlier today on the matter, as well as other issues. News on the equity front was focused on earnings, as FedEx missed estimates but reaffirmed its yearly outlook, while GameStop posted an unexpected loss. In economic news, the Leading Index rebounded from last month’s tumble, but existing home sales fell more than expected. Treasuries were mixed after falling this week following the Fed’s mid-week monetary policy decision, and the U.S. dollar moved higher. Meanwhile, gold was lower, and crude oil prices were higher in choppy trading as prices stayed above $100 per barrel. Europe finished higher as the Biden/Xi talks were in focus, while Asia finished out a wild week mostly higher.
The Dow Jones Industrial Average advanced 274 points (0.8%) to 34,755, the S&P 500 Index gained 51 points (1.2%) to 4,463, and the Nasdaq Composite increased 279 points (2.1%) to 13,894. In very heavy volume, as a result of quadruple witching day—the simultaneous expiration of options and futures contracts on equities and indexes—8.0 billion shares of NYSE-listed stocks were traded, and 7.9 billion shares changed hands on the Nasdaq. WTI crude oil advanced $1.44 to $103.09 per barrel. Elsewhere, the gold spot price traded $13.90 lower to $1,929.30 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was up 0.2% at 98.19. Markets were higher on the week, as the DJIA was up 5.5%, the S&P 500 gained 6.2%, and the Nasdaq Composite increased 8.2%.
The Conference Board’s Leading Economic Index (LEI) for February rose 0.3% month-over-month (m/m), matching the Bloomberg consensus estimate, and following January’s negatively-revised 0.5% decrease. The index rebounded from the first negative m/m reading since February 2021, courtesy of positive contributions from jobless claims, average workweek, the interest rate spread and ISM new orders, which more offset negative reads on consumer expectations and building permits.
Existing home sales fell 7.2% m/m in February to an annual rate of 6.0 million units, versus expectations of 6.1 million units, while January’s figure was adjusted slightly lower to 6.49 million. Contract closings hit a 6-month low, as sales in all the major U.S. regions fell m/m, while y/y sales were also lower in all regions but the South. Sales of single-family homes declined m/m but were up y/y, while purchases of condominiums and co-ops were lower both m/m and from the prior year. The median existing home price was up 15.0% from a year ago to $357,300, marking the 120th straight month of y/y gains as prices grew in each region. Unsold inventory was at a 1.7-months pace at the current sales rate, up from the from the 1.6-months pace a year earlier. Existing home sales account for a large majority of the home sales market and reflect contract closings instead of signings.
National Association of Realtors Chief Economist Lawrence Yun said, “Housing affordability continues to be a major challenge, as buyers are getting a double whammy: rising mortgage rates and sustained price increases,” which he said is taking a heavy toll on consumers’ savings. However, Yun said he expects the pace of price appreciation to slow as demand cools and as supply improves somewhat due to more home construction.
Treasuries were mixed after seeing some pressure this week following the Federal Reserve’s decision to raise 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.
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