Market Update 04/17/23

Chris Koruth John 

Markets performed with mixed results but closed with a modest rise between April 11 and April 17 as traders awaited key inflation data and minutes from the Federal Reserve March meeting.

The trading day ended mixed on Tuesday as investors remained anxious concerning numbers from the consumer price index and producer price index. The Dow Jones Industrial Average rose 0.3% and the Nasdaq composite fell 0.4%. The S&P 500 remained unchanged.

The Chicago Board Options Exchange’s Volatility Index, which is a gauge for general investor sentiment with relation to uncertainty, rose 0.7%. An increase in the volatility index indicates upticks in movement across the equity markets. 

Oil prices closed higher on Tuesday with institutional investors betting that the Fed’s rate hikes would subside. The price of Brent crude rose 1.7%, and the price of West Texas Intermediate crude increased 2.2%.

On Wednesday, the U.S. Bureau of Labor Statistics announced that the consumer price index rose 0.1% in March following a 0.4% increase in February. The core index increased 0.4% in March compared to a 0.5% increase in February, which was in line with the Street’s consensus. 

The Dow lost 0.1%, the S&P 500 dropped 0.4% and the Nasdaq fell 0.85%. Chicago’s volatility index remained flat following a choppy trading session. 

Recently released minutes from the Fed’s March meeting revealed an emphasis on the banking sector crisis. The minutes revealed a slight disagreement surrounding a possible rate hike pause, but the committee’s voting members eventually landed on a 25-basis-point rate hike. 

Markets closed in the green on Thursday following a slew of positive economic data. The Dow rose 1.1%, the S&P 500 gained 1.3% and the Nasdaq jumped 2%. The volatility index fell 6.8% to a value of $17.80 by Thursday’s close.

The Bureau of Labor Statistics revealed that the producer price index dropped 0.5% in March, in comparison to unchanged numbers in February. The main contributor to this decline in producer prices was gasoline prices, which recently cooled. Its core index, which excludes volatile energy and food prices, rose 0.3% in March. 

The U.S. Department of Labor reported that jobless claims rose to 239,000, marking an increase of 11,000 following the week that ended on April 8. These recent economic developments hint that the market may be pricing in another 25-basis-point rate hike moving forward.

The three major indexes closed lower on Friday as investors digested hawkish comments from Fed board member Christopher Waller concerning future rate hikes. The Dow lost 0.4%, the S&P 500 lost 0.2% and the Nasdaq lost 0.35%. 

“Financial conditions have not significantly tightened, the labor market continues to be strong and quite tight, and inflation is far above target, so monetary policy needs to be tightened further,” Waller said in a speech to the Graybar National Training Conference.

Stocks rose on Monday ahead of a busy week for earnings reports. All three major indexes gained about 0.3%. During the week of April 10, companies within the financial institutions group reported strong earnings. 

Investors should remain vigilant as companies across all major sectors report their earnings. Dividend aristocrats may make a robust investment at this time.