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Gradient Investments Weekly Talking Points 03/28/2022
All data is for the week ended March 25, 2022
Stocks
Stocks were broadly higher across the major indices, with the S&P 500 up 1.81%, the Russell 2000 down 0.38% and the NASDAQ up 1.99%. Overseas, the developed markets (MSCI EAFE) edged up 0.20% while the emerging markets (MSCI EEM) edged up 0.23%. In the US energy and materials were the best performing sectors while health care and real estate were the laggards. Large caps outperformed smaller caps.1
Fixed Income
Interest rates rose and bond values fell across the board, with the aggregate bond index (AGG) down 1.82%. Year to date it has declined 6.89%. The rate on 10-year treasuries rose 34 basis points last week to 2.48%; this compares to 1.52% at the start of the year or nearly a full percentage point.1
Commodities
The price of oil rose 10.5% to $113.90 per barrel for West Texas crude. Prices were driven by fears of a pipeline disruption in Kazakhstan and the possible imposition of an oil embargo on Russia.2
Economic Data
New home sales in February dropped 2% from the prior month to an annual rate of 772,000 – disappointing versus the consensus expectation of 810,000. It also represents a 6.2% decline on a year-over-year basis. The average sales price of new houses was $511,000. There is now a six-month supply of new homes available for sale which is considered balanced.3
The sales of existing homes slide 4.1% in February from the prior month, according to pending sales data, to the lowest level in nearly two years.4 On a year over year basis, sales were down 5.4%. Higher mortgage rates and sustained price appreciation has led to a year-over-year increase of 28% in mortgage payments.5
Initial jobless claims in the third week of March fell to 187,000 – their lowest since 1969— and below the consensus estimate by 26,000. This proves that the labor market continues to tighten as we continue our post-pandemic economic growth. 6
Company News7
Palo Alto Networks Inc. (PANW), a Core Select and G33 holding, shares rose 7.86% as the president warned last Monday that the Russian government is exploring a number of options for potential cyberattacks and that the US will use all of its tools to deter, detract and possibly respond to these potential attacks. As a leader in the cyber security sector, PANW is expected to lead the efforts.8
Rising energy prices drove up the price of numerous oil companies held by Gradient Investments in the following strategies by 4.7 to 9.4%:
- Core Select (Conoco Phillips – COP and Chevron-CVX)
- G50 (Exxon Mobil -XOM and Chevron-CVX)
- G40 (Suncor Energy Inc. -SU, Shell plc. – SHEL, BP PLC -BP)
- Energy (Conoco Philips-COP, Chevron-CVX, Exxon Mobil-XOM, Suncor Energy Inc.-SU, and BP PLC-BP)
Did you know…
The oldest Major League Baseball ballpark is the home field of the Boston Red Sox – Fenway Park. Officially opened in 1912, this stadium is still operating to this day. This year’s home opening day for the Sox will be on April 15 against the Minnesota Twins.
Mariann Montagne, CFA
Portfolio Manager
Sources:
1 JP Morgan Weekly Talking Points 3-38-22
4 National Association of Realtors 3-28-22
5 National Association of Realtors 3-25-22
6 US Department of Labor 3-24-22
8 CNN, “Biden Warns Business Leaders to Prepare” 3-21-22
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.