John Hancock: Weekly Market Recap Week Ended February 10th

Inflation battle

U.S. Federal Reserve Chair Jerome Powell said on Tuesday that the process of lowering inflation to the central bank’s goal of 2% “is likely to take quite a bit of time” and will probably be “bumpy.” His comments in a moderated discussion came after a week highlighted by an unexpectedly strong jobs report and yet another Fed rate hike.

Extreme inversion

The inversion of the yield curve grew to its widest margin since the early 1980s, as the negative spread between the yields of 2- and 10-year U.S. Treasury bonds swelled to 86 basis points at one point on Thursday. On Friday, the spread moderated, with the 2-year yield at 4.51% versus the 10-year note’s 3.74%.

Earnings downgrade

With the current quarterly earnings season winding down, analysts have been cutting their forecasts for first-quarter results that companies will begin reporting in April. Last month, analysts cut their earnings-per-share estimates by an average 3.3% for companies in the S&P 500, according to FactSet. While analysts typically cut estimates during the first month of a quarter, January’s average reduction exceeded the 1.5% average of the past five yea

Price check ahead

A Consumer Price Index report scheduled to be released on Tuesday will show whether the recent moderation in inflation extended into January. In December, inflation rose at an annual rate of 6.5%, marking the smallest year-over-year increase since October 2021.

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