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U.S. equities rise, oil rollercoaster continues

U.S. equities rise, oil rollercoaster continues

March 28, 2022
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U.S. equities rise, oil rollercoaster continues

As investors await the upcoming earnings season, major U.S. stock indexes finished slightly in the green last week for the second consecutive time. Overall, the S&P 500 added 1.79%%, the Nasdaq 100 tacked on 2.32%, and the Dow Jones Industrial Average increased by 0.31%.

Investors still grappling with uncertainty:

  1. Pending Homes Sales Stalled.
  2. Oil is a Rollercoaster.
  3. Bond Yields on the Rise
  4. Used Car Pullback?

1. Pending home sales data measures the change in the number of homes that are under contract (pending) and still await closing. New construction is excluded from the metric. 

Markets expected a 1% increase in pending home sales for the month of February and instead got a decrease of 4.1%.

This marked the fourth consecutive month of a dip in home sales, perhaps indicating that higher mortgage interest rates have impacted the broader market. As more time passes, we will be better able to assess the correlation between interest rates and housing metrics for this cycle.

The spring selling season is upon us, and we will be watching the market internals as it unfolds.

 2. Oil Rollercoaster

Pricing for May WTI Crude Oil increased by 10.49% last week after falling in the previous week. 

Crude oil’s rollercoaster ride continues as the market factors in the lack of oil from Russia and demand from various countries. Specifically, the recent COVID-19 lockdown in Shanghaiis making headlines regarding oil demand in China.

Here at home, the U.S. average gasoline price rests at $4.246 per gallon, according to March 28 AAA data.

3. Bond Yields Rise

It was a wild week for interest rate markets last week, as the benchmark US 10-year note rallied sharply from 2.207% starting the week to 2.503% at the end of the week. There's also chatter of 5-year and 30-year Treasury yields becoming inverted, which can be a leading indicator of future events like a recession. 

 4. Used Car Pullback?

In what could be a harbinger of things to come in the near future, past-due subprime auto loans are at the highest rate since April of 2020.

As inflation persists, many Americans are just making ends meet for their essential goods and services. A recent report shows that 64% of Americans are currently living paycheck to paycheck.

Reviewing and Moving Forward

Last week was constructive for U.S. equity indexes, given the headwinds that are currently in play. Long-term investing allows us to remain optimistic over long periods of time versus getting caught up in the day-to-day headlines chock full of emotion.

This week, we will get another read on the labor markets, courtesy of fresh non-farm payroll jobs data. Analysts will also be paying attention to the hourly wage growth metric, with consensus expectations of a 0.4% increase month-over-month. This employment data will be released on Friday morning.