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Gradient Investments Weekly Talking Points 03/07/2022
All data is for the week ended March 4, 2022
Stocks
Major equity indices across the globe dropped last week, with the S&P 500 down 1.24%, the Russell 2000 down 1.92% and the NASDAQ down 2.76%.
International markets were most affected by the war in Ukraine with the developed markets (primarily consisting of Europe) down 6.50% and the emerging markets down by 2.29%.
Again, value outperformed growth in the US. Energy and utilities were the best performing sectors while financials and technology were the worst performers.1
Fixed Income
Interest rates declined and bond values rose. The benchmark 10-year US treasury note yield fell 23 basis points to 1.74%.
The yield curve flattened as the rates on longer maturities fell more that that of the 2-year treasuries. Year to date the curve has flattened as the spread between 2-year treasuries and 10-years have narrowed from 79 basis points to 24 basis points.1
Commodities
The 31-member countries of the International Energy Agency announced agreed to release 60 million barrels of oil from their emergency reserves in a move to send a “unified and strong message to global markets that there will be no shortfall in supplies as a result of Russia’s invasion of Ukraine”.
Such a release only totals about 0.6% of one day’s worth of oil needs.2 When OPEC met mid-week, they agreed to make no changes to their production plans.3 The price of West Texas crude ended the week at $115.68 per barrel, up 26.3%.4
Gold (GLDM), an Endowment Series and Precious Metal strategy holding, saw prices rise again last week to nearly $2,000 per troy ounce as investors sought a safe haven in times of crisis. This occurred along with increases in the price of other precious metals that are more dependent on Russian sources. Year to date, gold is up 7.38%.5
Economic Data
Nonfarm payrolls rose by 678,000, well ahead of consensus expectations for a gain of approximately 440,000. The increase was led by the leisure and hospitality sector.
With that, the unemployment rate dropped to 3.8% from 4.0%. Also note that average hourly earnings rose 5.1% on a year over year basis.6
Company News7
Booz Allen Hamilton Holding Corp. (BAH), a holding in our Core Select, G33 and G50 strategies, rose 13.0% last week as this consulting group to the military is viewed as a primary beneficiary to increased defense spending globally.
Chevron Corp. (CVX), a holding in the Core Select and G50 strategies, rose 13.0% last week due to reduced supplies and higher prices for oil resulting from the Russian/Ukraine conflict.
L3Harris Technologies Inc. (LHX), a G50 holding, rose 14.3% last week. This provider of aerospace and defense tech solutions to governments is viewed as a major beneficiary of additional spending in the global defense sector.
Did you know…
The first computer programmer was an English mathematician who wrote an algorithm in the mid-1800s designed to be carried out by a machine. That mathematician’s name was Ada King, the Countess of Lovelace and daughter of Lady Anne Byron— also a mathematician—and Lord Byron.
Mariann Montagne, CFA
Portfolio Manager
Sources:
1 JP Morgan Weekly Market Recap 3-7-22
2Marketwatch.com, “Emergency Plan to Ease Global Shortage Fears Backfires” 3-1-22
3 Organization of the Oil Exporting Countries press release 2-2-22
6 Bureau of Labor Statistics 3-4-22
7 All weekly changes in company stock prices: Yahoo Finance
Advisory services are offered through American Retirement Advisors, Inc., a Registered Investment Advisor in the State of Michigan. Insurance products and services are offered through American Retirement Solutions an affiliated company. American Retirement Advisors, Inc. and American Retirement Solutions are not affiliated with or endorsed by the Social Security Administration or any government agency. The information contained herein should in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services to any residents of any State other than the State of Michigan or where otherwise legally permitted. All written content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Moreover, this material has been derived from sources believed to be reliable, but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed.
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