Weekly Market & Economic News Recap (Week of February 27, 2023)

• U.S. stock indexes dropped Tuesday in a relatively quiet session, ending a down month on a disappointing note.The Dow Jones Industrial Average slid 232.39 points, or 0.7%, to 32656.70. The S&P 500 ticked down 12.09 points, or 0.3%, to 3970.15, while the technology-focused Nasdaq Composite slipped 11.44 points, or 0.1%, to 11455.54. (Wall Street Journal, February, 28, 2023, https://www.wsj.com/articles/global-stocks-markets-dow-update-02-28-2023-b6a5a6a8)

• Stronger-than-expected manufacturing data Wednesday pushed the market lower and lifted the 10-year Treasury yield to a level rarely seen in recent years, as investors weigh signs of persistent inflation. The S&P 500 fell 18.76 points, or 0.5%, to 3951.39. The technology-focused Nasdaq Composite dropped 76.06 points, or 0.7%, to 11379.48. (Wall Street Journal, March 1, 2023, https://www.wsj.com/articles/global-stocks-markets-dow-update-03-01-2023-e351bfe5)

• Major indexes began the day mostly lower. Markets have been under pressure lately as hot economic data have convinced many investors that the Federal Reserve is likely to keep interest rates higher for longer. Stocks then wiped out their declines for the day after Atlanta Fed President Raphael Bostic said that he “still very firmly” supported raising interest rates in quarter-point increments. (Wall Street Journal, March 1, 2023, https://www.wsj.com/articles/global-stocks-markets-dow-update-03-02-2023-11f459f3)

• Fed official says hotter data will warrant higher rates. Job markets are still ‘unsustainably hot’ and progress on bringing down inflation may have stalled, says Fed governor Christopher Waller. (Wall Street Journal, March 2, 2023, https://www.wsj.com/articles/fed-official-says-hotter-data-will-warrant-higher-rates-a0162583?mod=economy_lead_pos1)

• U.S. applications for unemployment benefits edged lower last week, reflecting a persistently tight labor market. Initial jobless claims, a proxy for layoffs, decreased by 2,000 to a seasonally adjusted 190,000 last week, the Labor Department said Thursday. Weekly claims have remained below the 2019 prepandemic average of about 220,000 since the start of the year. (Wall Street Journal, March 2, 2023, https://www.wsj.com/articles/u-s-jobless-claims-ticked-down-last-week-a3655941?mod=economy_more_pos1)

• U.S. stocks gained Friday after data on the U.S. services sector showed its strongest activity since the summer. The signs of economic resilience outweighed concerns about inflation and tighter global monetary policy that prompted selling earlier in the week. The Nasdaq Composite jumped 226.02 points, or 2%, to 11689.01 as technology stocks recovered some of their losses from a dismal performance in February. The S&P 500 advanced 64.29 points, or 1.6%, to 4045.64 and the Dow Jones Industrial Average gained 387.40 points, or 1.2%, to 33390.97. (Wall Street Journal, March 3, 2023, https://www.wsj.com/articles/global-stocks-markets-dow-update-03-03-2023-3fa3f3be)

• The fixed-income market’s unblemished record of striking fear into the hearts of equity traders is in danger. With rates on two- and 10-year Treasuries up a sixth straight week, and payouts on cash at or above the earnings yield of the S&P 500, stock investors are barely registering a shrug. (Bloomberg, March 3, 2023, https://www.bloomberg.com/news/articles/2023-03-03/blaring-bond-alarms-are-falling-on-deaf-ears-in-the-stock-market)

• The global economy is showing vigor, with business surveys this week pointing to a widespread revival in growth despite rising borrowing costs and elevated energy and food prices, a sign that central banks may need longer than anticipated to bring inflation under control. (Wall Street Journal, March 3, 2023, https://www.wsj.com/articles/the-world-economy-is-doing-wellthis-is-bad-news-for-central-bankers-8beeb7c?mod=economy_lead_story)

• Federal Reserve Bank of San Francisco President Mary Daly said policymakers will likely need to raise interest rates higher and maintain them at elevated levels for a longer period of time. (Bloomberg, March 4, 2023, https://www.bloomberg.com/news/articles/2023-03-04/fed-s-daly-says-more-rate-hikes-likely-needed-to-cool-inflation?srnd=economics-v2)

• Amazon.com Inc.’s halt to construction of a new headquarters, on top of a parade of high-profile tech layoffs, looks ominous for the economy. But the damage will need to spread much further to signal full-blown recession. When the U.S. has entered recession in the past, weakness has often started in one sector and then spread like brushfire, pulling down a widening array of industries and the people who work in them. (Wall Street Journal, March 4, 2023, https://www.wsj.com/articles/cuts-at-amazon-other-tech-companies-dont-spell-recession-yet-244c992c?mod=economy_lead_story)