John Hancock: Weekly Market Recap Week Ended April 1st

Tough quarter

The nearly 5.0% quarterly decline for the S&P 500 in the first three months of 2022 marked the index’s biggest quarterly setback since early 2020, when the pandemic began. Despite the quarterly loss, the S&P 500 ended the quarter with a positive month in March, when it rose 3.6%.

Yield curve inversion

For the first time since 2019, the yield curve inverted, as the yield of the 2-year U.S. Treasury bond rose above the yield of the 10-year bond. Such an inversion is an indicator of concerns about short-term interest-rate increases as well as the possibility that a recession could loom ahead.

PCE inflation rises

An inflation measure that the U.S. Federal Reserve tracks in setting monetary policy rose to the highest annual level since 1983. The government reported on Thursday that the personal consumption expenditures price index increased to 5.4%, excluding food and energy prices. Factoring in those typically volatile categories, PCE inflation was 6.4%.

Longer-term view

Although Wall Street analysts have recently scaled back their expectations for quarterly earnings reports that begin coming out this month, they’ve been raising their forecasts for the rest of the year, according to FactSet. In January through March, analysts cut their first-quarter earnings estimates for companies in the S&P 500 by 0.7% while lifting them for the subsequent three quarters by 1.6%, 2.4%, and 3.9%, respectively.

Source: https://wmr.jhinvestments.com/