April 14, 2023, Weekly Stock Market Return Recap. All US equity indexes edged upward on the week: S&P 500 closed up 0.8%, Dow Jones finished +1.2% and Nasdaq inched +0.3%. The US equity markets have been rebounding these past 6 weeks, but it is important to keep in mind that a bear market has never bottomed out before a recession begins. As investors brace for an economic slowdown, this week began with the most significant net short position in the S&P 500 futures since 2011. Furthermore, the breadth of the market remains lackluster, with 57% of stocks in the S&P 500 trading below their 200-day moving average. The Consumer Price Index (CPI) revealed headline inflation rose 0.1% over last month and 5.0% over the prior year in March, a slowdown from February's 0.4% month-over-month increase and 6% annual gain. March's inflation of 5.0% was down from June's 9.1%, marking the slowest annual increase in consumer prices since May 2021, and growing ever closer to the Federal Reserve's 2% target. Both measures were slightly better than economist forecasts of a 0.2% month-over-month increase and 5.1% annual increase, according to data from Bloomberg.
March 31, 2023, Weekly Stock Market Return Recap. All three US equity indexes spiked more than 3% on a weekly basis. For the month, the S&P 500 closed 3.51% higher, while the Nasdaq jumped 6.69%. Insofar as the headline gains are impressive, the positive territory gains are largely recovery trends that are yet to be supported by wide sector market breadth support. For example, Apple and Microsoft accounted for about one-half of the S&P 500’s monthly gains. Another way to break this down is that while the S&P 500 is now up 7.5% year-to-date, the Information Technology sector contributed +5.44% of that total gain for the first quarter (Q1FY23). Indeed, only four of the 12 sectors in the S&P 500 are meaningfully up, with four sectors in the red and another four sectors about breakeven on the year. The catalyst for the market recovery this month is that the real federal-funds rate is quickly approaching positive territory. In the past, this has signaled the end of rate hikes, with the central bank likely only having one further rate hike ahead.