Week of March 28, 2022

The U.S. equity markets rose last week for their second consecutive week.  The S&P 500 gained 1.8% after surging 6.2% the previous week.  Back-to-back weekly gains have placed the index solidly on track for its first monthly increase of the year, barring a significant decline in the four remaining trading sessions of March.  Given the declines of January and February, the S&P 500 is down 4.7% as of last Friday’s close.

All but once sector of the S&P 500 rose last week.  Energy had the largest weekly increase, up 7.4%, followed by materials, up 4.1%, and utilities, up 3.5%.  The one sector that declined was health care, down 0.2%.

The March jobs report takes center stage this week.  The Labor Department monthly employment report, due this Friday, will be closely watched by the market and will carry special weight as the Federal Reserve appears to signal more hawkishness in its plans for raising interest rates.  Meanwhile, core PCE (personal consumption expenditures), the Fed’s preferred gage of inflation, is also due out Wednesday and will offer further clues on how aggressive the Fed will be in raising interest rates at its scheduled May 3 – 4 meeting.  If the employment report shows a tighter-than-ever labor market, the Fed could be inclined to move ahead with a 50-basis point increase.

“The Federal Reserve has a dual mandate to promote employment and stable prices,” Bankrate senior industry analyst Ted Rossman said in a note.  “The strong labor market is leading the Fed to focus squarely on combating the high inflation rate.  Fed Chair Jerome Powell recently hinted at a more aggressive pace of rate hikes, and his report fits the narrative since inflation is a much bigger concern than unemployment right now.”