Markets Start the Week On a Positive Note…..
U.S. equities closed higher to begin the week, as the more growth-oriented sectors of Information Technology, Communications Services, and Consumer Discretionary led the way. The markets continued to grapple with the ongoing war in Ukraine, while they also began to look ahead to a key round of Fed reports due out later in the week. Most notably, the Wednesday afternoon release of the Fed’s minutes from the March meeting has garnered the bulk of investors’ attention as the Fed is set to get more aggressive with monetary policy tightening. The Treasury yield curve, which has inverted at some points as of late to foster recession uneasiness, continued to garner attention, as the curve steepened and Treasuries were mixed. Meanwhile, the U.S. dollar gained ground, as did gold, while crude oil prices were back above $100 per barrel. In equity news, Twitter rallied on the disclosure that Elon Musk acquired more than a 9.0% stake in the social media platform, while Tesla posted stronger-than-expected Q1 deliveries despite supply chain and China challenges. Additionally, Starbucks Corporation announced that founder Howard Schultz is returning to the company as Chief Executive Officer. In light economic news, factory orders declined to kick off the week’s docket. Europe and Asia both finished higher to begin the week, with mainland Chinese markets closed for a holiday.
The Dow Jones Industrial Average rose 104 points (0.3%) to 34,922, the S&P 500 Index gained 37 points (0.8%) to 4,583, and the Nasdaq Composite increased 271 points (1.9%) to 14,533. In moderate volume, 4.4 billion shares of NYSE-listed stocks were traded, and 4.5 billion shares changed hands on the Nasdaq. WTI crude oil rose $4.01 to $103.28 per barrel. Elsewhere, the gold spot price traded $10.30 lower to $1,934.00 per ounce, and the Dollar Index was 0.4% higher at 99.00.
Factory orders mixed, Treasury yield curve steepens after recently flattening…..
Factory orders (chart) declined 0.5% month-over-month (m/m) in February, versus the Bloomberg estimate of a 0.6% decrease, with the prior month’s 1.4% rise being revised to a 1.5% increase. Durable goods orders—preliminarily reported two weeks ago—were revised favorably to a 2.1% drop for February, and excluding transportation, orders were unrevised at a 0.6% decline. Finally, non-defense capital goods orders excluding aircraft—considered a proxy for capital spending—were favorably-revised to a 0.2% decrease.
Treasuries were mixed as the yield curve steepened somewhat after flattening noticeably as of late amid increased expectations of a more aggressive Fed monetary policy tightening cycle as it tries to combat the surge in inflation. The yield on the 2-year note ticked 2 basis points (bps) lower to 2.41%, while the yield on the 10-year note gained 3 bps to 2.41%, and the 30-year bond rate advanced 4 bps to 2.46%.
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