Weekly Market Update

“Economics is a very difficult subject. I’ve compared it to trying to learn how to repair a car when the engine is running.”

~ Former Fed Chair Ben Bernanke

For the first time since 2018, the Federal Reserve voted on Wednesday to raise short-term interest rates and indicated plans to continue to hike after every one of its remaining six meetings in 2022. However, instead of stocks falling, investors seemed relieved to finally get past this much anticipated and widely telegraphed Fed decision and the S&P 500 actually strengthened on the news. The bounce in stocks was not limited to Wednesday either as the S&P 500 registered four consecutive days of over 1% gains, a feat that had not been accomplished since November 2020. Thursday’s move was also very noteworthy as the stock market’s strength coincided with oil prices jumping 8% and back over $100/barrel. Just two and a half weeks ago, for example, the S&P 500 had fallen over -1.5% on March 1st when geopolitical concerns caused oil to rally 8% and over $100/barrel, so it was encouraging to see stocks decouple from moving lower as commodity prices surged. As a result, the S&P 500 registered its strongest week since April 2020, rising over 6%, while the tech-heavy Nasdaq Composite, which was briefly down -20% for the year on Monday, finished the week up over 8%. Such multi-day stock market rallies often bode well for future returns but headlines out of Ukraine will continue to create bouts of volatility and we expect investors to pay particularly close attention to manufacturing data next Thursday as markets gauge the potential economic impact from Russia’s invasion and recent economic lockdowns in China.

The Luck of the Irish?

Thursday was Saint Patrick’s Day and we wanted to highlight a rather interesting market phenomenon. Since 1950, Saint Patrick’s Day has been one of the strongest days of the year for the S&P 500 (see chart from LPL Financial below). This year, the holiday saw the S&P 500 rise 1.23% and was a welcome departure from Thursdays being the worst day of trading of 2022, down on average -0.9% before this week. To be clear, this is probably not actionable market information, but with stocks entering this week down four of the last five weeks, we will take it!

Ian G. Browning, CFA
Managing Director, Investment Strategies | Shareholder