Week of February 20, 2023

The investments markets exhibited marked volatility last week, as it has for much of the month of February. The Dow Jones Industrial Average and the Nasdaq were both positive for the week, posting gains of 0.02% and 0.59%, respectively. The S&P 500 ended the week in negative, finishing at -0.20%. Bonds also saw a general decline, with the Bloomberg U.S. Aggregate Bond Index dropping 0.47%.

Last week saw the release of numerous reports on economic data and the health of the U.S. economy. January’s Consumer Price Index (CPI) report came in hotter-than-expected, showing inflation had risen 6.4% year-over-year and a 0.5% increase month-over-month – both higher than previously estimated. However, the CPI report did reflect continued deceleration on a year-over-year basis.

Other reports that came out included a stronger-than-expected January retail sales report, higher-than-expected Producer Price Index, and another lower-than-expected jobless claims report. All this positive economic news was, unfortunately, bad news. The strong economic reports fueled investors’ concerns that the Federal Reserve (Fed) is nowhere near the end of its fight against inflation. There is growing sentiment that there is a greater possibly of the Fed raising higher and keeping them there for longer than previously anticipated.