This Week in Review 3/14/2022

“The only true wisdom is knowing that you know nothing.”
Socrates

Even though oil prices cooled towards the end of the week, market participants remained disinterested in buying… this created a vacuum and buyers were scarce.

The stock market started the week in a hole as oil prices flirted with $130 per barrel. Oil prices eventually cooled off, but the hole was too deep for the market to climb out of given the fear of the toll on the economy.

The S&P 500 fell 2.9%, the Nasdaq Composite fell 3.5%, the Dow Jones Industrial Average fell 2.0%, and the Russell 2000 fell 1.1%.

The inital spike to $130 per barrel was in anticipation of the U.S. ban on Russian energy imports, which included oil, gas, and coal. On a related note, the UK and EU said they would phase out their Russian energy imports this year, but the UK said it was still exploring options for a ban on gas imports.

WTI crude futures ended the week at $109.10/bbl, which 5.4% lower versus last Friday. The S&P 500 energy sector still rose 1.9%, while the other ten sectors in the S&P 500 sectors ended in negative territory. The consumer staples (-5.8%) and information technology (-3.8%) sectors were the weakest performers.

Despite the retracement in oil, the fact of the matter was that the environment was still inflationary with oil up 45% for the year and total CPI up 7.9% year-over-year in February. That understanding fueled concerns about a slowdown in consumer spending and expectations for the Fed to hike rates more aggressively this year.

More erratic than oil this week was nickel, which soared at the London Metal Exchange (LME) on Tuesday, more than doubling at one point to exceed $100,000 per metric ton before the LME suspended trading for the day.

The Russia-Ukraine situation remained a frustrating one because one headline would lift the market's spirits only for the next headline to disappoint the market. Ceasefire talks between Russia and Ukraine broke down without any real progress, and the market didn't believe President Putin's claims that there was a positive shift in talks.

Treasury yields spiked despite the growth concerns telegraphed in the stock market, presumably because of inflation expectations and cash-raising efforts. That didn't help risk sentiment. The 2-yr yield rose 26 basis points to 1.75%, and the 10-yr yield rose 28 basis points to 2.00%.

Separately, Amazon.com was in the spotlight after the company announced a 20-for-1 stock split and a $10 billion share repurchase authorization. AMZN shares were down 0.1% for the week.

Market Update:

• Oil Prices - U.S. West Texas Intermediate (WTI) crude rose at the beginning of the week but settled last Friday at $109.33 per barrel. Crude prices are well off the highs seen earlier last week.
• Gold - Spot gold was down 0.3% at $1,991.20 per ounce, but remained poised for a weekly rise of about 1.2%. U.S. gold futures fell to settle at $1,997.70 an ounce. Silver finished the week at $26.16.
• U.S. Dollar - The dollar index was up 0.6% on the week, near the highest since 2020. Euro/US$ exchange rate is now 1.112.
• U.S. Treasury Rates - The yield on the 10-year Treasury was little changed at 2%, but rose 28.2 basis points for the largest weekly gain since September 2019.
• Consumer Price Index (CPI) - Up 7.9% YoY, the highest level since January 1982.
• Asian shares were mostly lower in overnight trading.
• European markets are trading in the green.
• Domestic markets are trading mixed this morning.

We cannot predict who wins the military conflict between Russia and Ukraine, but we can predict with confidence the odds of winning in self-sufficiency and innovation in technology remain in favor of our country.

Have a wonderful week!

The opinions expressed herein are those of Michael Hilger and not necessarily those of Raymond James & Associates, Inc., and are subject to change without notice. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forcasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

The information contained herein is general in nature and does not constitute legal or tax advice. Inclusion of these indexes is for illustrative purposes only. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Past performance does not guarantee future results. The Dow Jones Industrial Average (INDU) is the most widely used indicator of the overall condition of the stock market, a price-weighted average of 30 actively traded blue chip stocks, primarily industrials. The Dow Jones Transportation Average (DJTA, also called the "Dow Jones Transports") is a U.S. stock market index from the Dow Jones Indices of the transportation sector, and is the most widely recognized gauge of the American transportation sector. Standard & Poor's 500 (SPX) is a basket of 500 stocks that are considered to be widely held. The S&P 500 index is weighted by market value, and its performance is thought to be representative of the stock market as a whole. The NASDAQ Composite Index (COMP.Q) is an index that indicates price movements of securities in the over-the-counter market. It includes all domestic common stocks in the NASDAQ System (approximately 5,000 stocks) and is weighted according to the market value of each listed issue. The Russell 2000 index is an unmanaged index of small cap securities which generally involve greater risks.

Investing in oil involves special risks, including the potential adverse effects of state and federal regulation and may not be suitable for all investors.

International investing involves special risks, including currency fluctuations, differing financial accounting standards, and possible political and economic volatility.

The companies engaged in the communications and technology industries are subject to fierce competition and their products and services may be subject to rapid obsolescence.

Gold is subject to the special risks associated with investing in precious metals, including but not limited to: price may be subject to wide fluctuation; the market is relatively limited; the sources are concentrated in countries that have the potential for instability; and the market is unregulated.

The information contained within this commercial email has been obtained from sources considered reliable, but we do not guarantee the foregoing material is accurate or complete.

Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

Charts are reprinted with permission, further reproduction is strictly prohibited.