Weekly Market Insights

April 8, 2022 Volume 9 Issue 14

Indications that the Federal Reserve plans to aggressively tighten monetary policy going forward, combined with continued geopolitical tension and mixed economic data, weighed on investor sentiment and pushed domestic equity markets lower for the week, with the tech heavy NASDAQ underperforming the broader markets. 

Weekly Highlights:

• US factory activity expanded at a slower pace in March with the ISM manufacturing PMI falling 1.5 points to 57.1, its lowest level since September 2020 and well below expectations. The decrease was led by a 7.9-point drop in the new orders index, while the production index fell 4 points to 54.5. Additionally, the ISM Prices index jumped 11.5 points to 87.1, its highest level since December 2020 and consistent with rising inflationary pressures.
• Activity in the much larger services sector of the US economy rebounded in March with the ISM Services PMI rising 1.8 points to 58.3, slightly above expectations. The increase was led by a 5.5-point jump in the employment index, while new orders and business activity also picked up, as the Omicron wave faded and Covid restrictions continued to be lifted.
• Factory orders fell 0.5% in February, down for the first time in ten months, but slightly better than the decline of 0.6% expected by economists. Durable goods orders fell 2.1%, led by transportation equipment, while nondurable goods orders increased 1.2%, led by petroleum products. Excluding transportation, orders were 0.6% lower.
• Total consumer credit grew at an annualized rate of 11.3% or $41.8 billion dollars in February, up sharply from a gain of $8.9 billion in January and well above expectations. Nonrevolving credit, which includes debt such as auto and student loans, increased at an annual rate of 8.4%, while revolving credit, which includes credit cards and personal lines of credit, increased at an annualized rate of 20.7%.
• Initial claims for unemployment insurance fell by 5,000 last week to 166,000, matching its lowest since 1968 and well below expectations. Continuing claims also remained below their pre-pandemic levels, edging up slightly to 1.523 million, as labor market conditions remain extremely tight.

The Week Ahead:

• Economic releases will include current readings on consumer and wholesale inflation, retail sales, industrial production, the NFIB small-business index and preliminary data on consumer sentiment for the month of April. 

Have a great weekend.