Markets declined from Feb. 21 to Feb. 27 as investors began to digest the possibility of a 50-basis-point rate hike.

Markets plunged on Tuesday after hawkish sentiments were made by St. Louis Federal Reserve President James Bullard and Cleveland Fed President Loretta Master.

“The inflation readings are still not where we need them to be,” Master told Bloomberg News.

These remarks sent waves through the market, crushing investor sentiment that was rebounding earlier this year. The Dow Jones Industrial Average slid 2.5%, the S&P 500 slid 2.0% and the Nasdaq composite slid 2.1%.

Fear surrounding higher interest rates has fueled a 12.6-basis-point increase in the 10-year U.S. Treasury note, bringing it to a value of 3.953%, the highest yield it’s reached since November 2022. The 2-year U.S. Treasury note reached a yield of 4.729%, its highest since 2007.

Economic data released on Tuesday indicated the housing market is cooling with existing home sales falling 0.7% or by 4 million units. The data underperformed Wall Street’s consensus of a 4.09 million seasonally adjusted annual rate of home units.

On Wednesday, markets closed mixed after the release of the minutes from the Fed’s February  meeting. Fed officials shed light on ongoing monetary policy and maintained a resilient stance against inflation, which is fortunately showing signs of slowing. This spooked some investors who were optimistic about 25-basis-point hikes moving forward.

The Dow fell 0.3%, the S&P 500 fell 0.2% and the Nasdaq rose 0.1% thanks to an excellent performance of large-cap technology stocks. The yield on the 10-year U.S. Treasury note fell to 3.2%, and the yield on the two-year U.S. Treasury note fell to 4.693%.

Thursday generated a slew of economic data. The U.S. Department of Commerce announced that the nation’s fourth-quarter gross domestic product growth for the 2022 fiscal year was 2.7%, missing estimates by 0.2%. The U.S. Department of Labor reported that weekly jobless claims decreased by 3,000 to 192,000, beating the consensus of 198,000.

By the closing bell, the Dow rose 0.3%, the S&P 500 rose 0.5% and the Nasdaq rose 0.7%. The energy select sector and technology select sector were the biggest movers, gaining 1.5% and 1.7%, respectively.

National consumer spending reached a two-year high in January, climbing to a value of 1.8%. The personal consumption expenditures price index rose 0.6% in January, marking its largest increase since June 2022.

In tandem, the reports suggest that a 50-basis-point rate hike for March is a possibility that cannot be ignored by investors. The Dow declined 1.0%, the S&P 500 declined 1.1% and the Nasdaq declined 1.7% on Friday.

Markets rose on Monday thanks to a rebound of large-cap technology stocks. The rebound followed what analysts have called the worst week for U.S. equities for this year. The Dow gained 0.22%, the S&P 500 gained 0.31% and technology-heavy Nasdaq gained 0.63%.

Investors should look to increase portfolio holdings in recession-proof sectors that are focused on returning shareholder value. Midstream energy companies may be a robust play at this time.