Stocks Pare Losses to Snap a Two-day Losing Streak…..

U.S. stocks rebounded in late-date action to break a two-day losing cycle as the markets digested the ramped-up concerns on the heels of hawkish Fed commentary and minutes from its March meeting this week that suggested highly aggressive monetary tightening. The sharp steepening of the Treasury yield curve has garnered scrutiny as rates on the longer end have finally started to outpace the shorter end. Meanwhile, the ongoing war in Eastern Europe remains a source of uncertainty with the U.S. announcing new sanctions against Russia and the European Union mulling further penalties. In equity news, HP rallied on news that Warren Buffett’s Berkshire Hathaway disclosed roughly an 11.0% stake in the PC and printer maker, while Levi Strauss & Co saw pressure despite its stronger-than-expected earnings results. In other earnings news, Constellation Brands was up as its beer unit sales and higher pricing helped it top estimates, while Conagra Brands showed resiliency despite noting higher costs hampered results and guidance. In economic news, jobless claims matched the lowest since 1968 and the consumer credit showed that consumer borrowing in February expanded significantly more than expected. Treasuries were mixed and the U.S. dollar ticked higher, while crude oil prices diverged, and gold prices gained. Asia was broadly lower, while Europe finished mixed on the heels of yesterday’s drop.

The Dow Jones Industrial Average rose 87 points (0.3%) to 34,584, the S&P 500 Index gained 19 points (0.4%) to 4,500, and the Nasdaq Composite increased 8 points (0.1%) to 13,897. In moderate volume, 4.7 billion shares of NYSE-listed stocks were traded, and 4.7 billion shares changed hands on the Nasdaq. WTI crude oil fell $0.20 to $96.03 per barrel. Elsewhere, the gold spot price traded $12.30 higher to $1,935.40 per ounce, and the Dollar Index was up 0.2% at 99.80.

The equity markets remained choppy following a recent bout of resiliency off of the March 8 lows that took the S&P 500 out of traditional correction territory—at a 10% drop from a recent high—and rescued the Nasdaq from a bear market—at least a 20% drawdown from a recent high. The markets continued to contend with the ongoing war between Russia and Ukraine, and expectations that the Fed is set to get aggressive with its monetary policy tightening campaign to try to tame elevated inflation pressures.

Initial jobless claims came in at a level of 166,000—the lowest since 1968—for the week ended April 2, versus the Bloomberg consensus estimate calling for 200,000, and versus the prior week’s downwardly-revised 171,000 level. The four-week moving average declined by 8,000 to 170,000, and continuing claims for the week ended March 26 increased by 17,000 to 1,523,000, versus estimates of 1,302,000. The four-week moving average of continuing claims dropped by 35,250 to 1,541,250. The unusual discrepancies between the actual figures and estimates of initial and continuing claims appear to be as a result of the Department of Labor’s change to its model on how they seasonally adjust the data beginning with this week’s report.

Consumer credit, released in the final hour of trading, showed consumer borrowing expanded by $41.8 billion during February, well above the $18.1 billion forecast of economists polled by Bloomberg, while January’s figure was adjusted upward to $8.9 billion from the originally reported $6.8 billion. Non-revolving debt, which includes student loans and loans for vehicles and mobile homes, rose $23.8 billion, an 8.4% increase year-over-year (y/y), while revolving debt, which includes credit cards, rose by $18.0 billion, a 20.7% y/y increase.

Treasuries were mixed after a recent drop that has seen rates jump and the yield curve steepen. The yield curve spread has garnered heavy attention, with some portions inverting earlier this month to foster talk of the potential for a recession on the horizon. However, the recent steepening of the curve saw a key portion—spread between 2-year and 10-year yields—move out of inversion territory this week, with the yield on the 10-year note hitting three-year highs.

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