Weekly Market Performance - Markets Reverse Course Following a Stellar January

Friday, February 10, 2023 View enlarged chart U.S. and International Equities Markets Lower The major market averages finished lower, as the only sector to finish positive was energy. Energy performed well as oil prices rebounded on Russian production cuts.

Markets Lower

The major market averages finished lower, as the only sector to finish positive was energy.  Energy performed well as oil prices rebounded on Russian production cuts.  With the S&P 500 well above its October 2022 low and the 4,000 level, some investors believe the path to lower inflation and a Federal Reserve (Fed) pause could still be bumpy for markets. Underwhelming fourth quarter earnings have also added support for the market selloff.

Fixed Income Tumbles as Yields Increase

The Bloomberg Aggregate Bond Index finished the week lower as yields increased.  Bonds have been directly influenced by hawkish Fed speak this week amid last week’s Powell comments regarding “disinflationary” conditions. In addition, high-yield corporate bonds, as tracked by the Bloomberg High Yield index, finished the week lower yet are leading all bond markets in year-to-date returns.

According to the Fed’s Senior Loan Officer Opinion Survey on Bank Lending Practices, released on Monday, over 40% of banks have recently tightened lending standards for commercial and industrial (C&I) loans. C&I loans are an important funding source for companies that can’t (or don’t want to) access capital markets for additional monies to fund growth initiatives or to just help pay the bills.

Commodities Mostly Higher

Oil and natural gas prices finished the week higher.  Russian plans to reduce oil production next month after the West imposed price caps on the country’s oil and oil products helped to stabilize recent weakness. OPEC country officials believe that the commodity may resume its rally in 2023 as Chinese demand recovers after COVID curbs were lifted as well as a lack of investment limiting supply.  Many commodity watchers believe oil could return to $100 a barrel.  The major metals, including gold, silver, and copper finished the week mixed.

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