April 2022
Financial Market Update
Before we launch into a recap of the past few months, we want to highlight a few topics close to our hearts. This month we recognize and celebrate Autism Awareness Month and Financial Literacy Month.
Managing Partner and Founder, Michael Smith, has long been a supporter of the work being done at Seattle Children’s, enabling adults with autism to live full and rich lives. This month you can find out more by visiting the links included in this post.
Being part of the financial industry, Emerald takes our responsibility to educate our clients and their families seriously. Financial literacy is crucial for individuals to understand how to manage and use their money to work towards achieving their goals. Over the past two years, the pandemic has shown how crucial financial literacy really is. As a firm we are committed to offering education to our clients on a regular basis through our monthly newsletters. If you would like to join the Emerald Way, please send your full name and email address to info@emeraldadv.com and enter ‘financial literacy’ in the subject line. Now let’s talk market updates.
After a soft two months for major U.S. equity indexes, March brought renewed buying interest as interest rates and inflation continued to rise.
For March[i], the S&P 500 increased by 3.58%, the Nasdaq 100 added 4.22%, and the Dow Jones Industrial Average added 2.32%.
Commodities High, Inventories Low
Walk out the door and get ready to spend–that’s how it’s felt lately, with the prices of all sorts of goods and services soaring.
From industrial supplies to food, consumer discretionary items to services, it has been a wild month (and year) for almost all types of pricing. This was evident in the February Consumer Price Index (CPI) data, which showed inflation rising 7.9%[ii].
U.S. Stocks Bid, Rates Rise
After negative results in January and February, the S&P 500 found buyers as the end-of-quarter neared. The S&P 500, Dow Jones Industrial Average, and Nasdaq have all been clawing back at the declines from January and February. We’ll see how the positive finish to the quarter trickles over into Q2.
While U.S. stock indexes were rising in March, bonds were falling. Yields have been on the rise, and there’s been some chatter about the currently inverted yield curve[iii]. The yield curve is inverted when US 2-year notes have a higher yield than 10-year notes.
Jobs Strength
Fresh jobs data from April 1st showed 431,000 jobs added[iv] in March, slightly below the 490,000 estimate. The unemployment rate declined to 3.6%[v] as corporate America continued its hiring spree–with notable strength in the leisure and hospitality sectors[vi].
The Takeaway
March showed resilience as the three major U.S. equity indexes posted their first monthly rises in three months. War jitters have seemed to smooth out in recent trading sessions, and many speculate that war is now fully priced into financial assets.
As always, traders will be eyeballing the upcoming CPI data scheduled to drop on April 12th. Recent Personal Consumption Expenditures (PCE) Price Index metrics showed a 5.4% rise[vii] in February. PCE is one of the Fed’s favorite gauges of inflation[viii].
Heading into April, the prevailing theme is one of interest rates, 2/10-year note yields, and high commodities prices[ix].
With that said, if you’d like to discuss the current market outlook in more detail or further explore strategies based on your investment objectives, please feel free to respond by email or give me a call.
Disclosure: Emerald Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
[i] Marcos, C. (2022, March 31). Wall Street rebounded in March even as worries grew over Ukraine and inflation. NYTimes.com. [Online] Available at: Stocks Rebounded in March After a Major Slide – The New York Times (nytimes.com).
[ii] Cox, J. (2022, March 10). CNBC.com. Inflation rose 7.9% in February, as food and energy costs push prices to highest in more than 40 years. [Online] Available at: CPI inflation February 2022: (cnbc.com)
[iii] McWhinney, J. (2022, March 28). The Impact of an Inverted Yield Curve. Investopedia.com. [Online] Available at: CPI inflation February 2022: (cnbc.com).
[iv] Cox, J. (2022, April 1). CNBC.com. Economy added 431,000 jobs in March despite worries over slowing growth. [Online] Available at: CPI inflation February 2022: (cnbc.com).
[v] Mutikani, Lucia. (2022, April 1). Reuters.com. U.S. unemployment rate drops to 3.6% as labor market rapidly tightens. [Online] Available at: U.S. unemployment rate drops to 3.6% as labor market rapidly tightens | Reuters.
[vi] Franck, T. (2022, April 1). CNBC.com. Here’s where the jobs are – in one chart. [Online] Available at: U.S. unemployment rate drops to 3.6% as labor market rapidly tightens | Reuters.
[vii] Cox, J. (2022, March 31). CNBC.com. The Fed’s preferred inflation gauge rose 5.4% in February, the highest since 1983. [Online] Available at: The Fed’s preferred inflation gauge rose 5.4% in February, the highest since 1983 (cnbc.com).
[viii] Leonhart, Megan. (2022, March 31). Fortune.com. Latest inflation barometer shows core prices up 5.4%, here’s what the Fed could do next. [Online] Available at: What is PCE inflation and why does it matter to the Fed | Fortune.
[ix] Forrester, J.S., (2022, March 31). Powderbulksolids.com. Food Firms Continue to Face High Ingredient and Commodity Prices. [Online] Available at: Food Firms Continue to Face High Ingredient and Commodity Prices (powderbulksolids.com).
