During the first quarter of 2023, the stock market proved to be quite resilient, despite rising inflation, uncertainty surrounding the Federal Reserve’s policies, interest rate hikes, and banking concerns.

In January 2023, inflationary data seemed to show a possible peak, giving hope that the Federal Reserve would scale back interest rate hikes. However, subsequent inflation data showed prices ramped up again.

Inflation and Banking Challenges Played a Heavy Role on the Economy

As investors responded to interest rate concerns, stocks and bond prices dipped. In addition to the impact of rising inflation, two major banks collapsed in March 2023. As a result, bank stocks dropped further. Along that vein, the first quarter saw the takeover of Credit Suisse Group. Overall, Credit Suisse Group neared failure. Thus, its  rival, UBS Group, assumed control of the bank. Simultaneously, several banks in the United States provided funds to keep First Republic Bank afloat.

Although the banking sector faced its share of challenges, the long-anticipated economic recession has not come to fruition quite yet. Holistically, the labor market remains strong, despite rising inflation. Furthermore, the two primary inflation indicators, the Consumer Price Index and the Personal Consumption Expenditures Price Index, showed prices slowed on an annual basis.

Stock Market Ended First Quarter of 2023 on the Plus Side

Despite all of this apparent turmoil, coupled with the ongoing war in Ukraine, stocks regained their footing. Moreover, stocks ended the first quarter of 2023 on the plus side. The tech-heavy Nasdaq led the benchmark indexes. Additionally, the S&P 500, the Global Dow, the Russell 2000, and the Dow Jones closely followed the NASDAQ. Investors poured money back into Mega cap tech shares, driving them higher during the first quarter of 2023 after an underperforming 2022. Those gains helped drive the Nasdaq and the S&P 500 higher.

Even with investors taking gains from the Mega caps, other market sectors reaped the benefits. Energy stocks, which excelled in 2022, fell in the first quarter of 2023. Also, crude oil prices dropped as well. Conversely, gas prices rose minimally higher, with regular retail prices averaging $3.421 per gallon on March 27, $0.14 over prices on January 4th. The dollar dipped lower, while gold prices rose higher.

Stock Market Enjoys Best January Performance Since 2019

The quarter kicked off with stocks enjoying their best January performance since 2019, as inflation data suggested that inflation may have peaked, raising hopes that the Federal Reserve would scale back interest-rate hikes and temper fears of an economic recession. Nevertheless, Federal Reserve Chair Jerome Powell cautioned that the battle against rising inflation was far from over and additional rate hikes were upcoming. In fact, the Federal Reserve hiked interest rates 25.0 basis points on the last day of the month. Growth stocks performed best, with Mega caps making solid gains.

Consumer discretionary, communication, and tech sectors performed well, while defensive sectors, such as utilities, health care, and consumer staples, dipped lower. Bond prices advanced, pulling yields lower. While 260,000 new jobs were added in December, the growth was the slowest in two years. Average hourly earnings rose to the lowest annual level (4.6%) since September 2021. However, manufacturing declined at the fastest rate since May 2020, while services retracted for the third month running, according to the S&P Global Manufacturing PMI™. Nevertheless, each of the benchmark indexes listed here added value, led by the Nasdaq (10.7%), followed by the Russell 2000 (9.7%), the Global Dow (7.8%), the S&P 500 (6.2%), and the Dow (2.8%). Ten-year Treasury yields fell 35.0 basis points, crude oil prices dipped 1.7%, the dollar slid 1.4%, but gold prices advanced 6.3%.

February 2023 Shows Backslide for Stock Market

Stocks gave up some of their January gains in February, with each of the benchmark indexes losing value. The Dow (-4.2%) fell the furthest, followed by the Global Dow (-2.7%), the S&P 500 (-2.6%), the Russell 2000 (1.8%), and the Nasdaq (-1.1%). Bond prices declined, driving yields higher, with 10-year Treasury yields advancing 39 basis points. Crude oil prices decreased 2.8% to $76.86 per barrel.

The dollar rose 2.8% against a basket of currencies. Gold prices lost most of their January gains, falling 5.7% in February. Consumer prices advanced, with core prices (excluding food and energy prices) climbing 0.6%, the biggest advance since August. Over 500,000 new jobs were added, nearly three times the consensus estimates, and the largest increase in six months. The unemployment rate slid to 3.4%, its lowest level since 1969. Consumer spending rose 1.8%, the most in nearly two years.

March 2023 Outperformed Despite Global Banking Crisis

March was a very choppy month for market returns. Despite an apparent banking crisis, investors stayed the course for the most part, driving stocks mostly higher. The Nasdaq and the S&P 500 led the gainers of the benchmark indexes listed here. Several sectors outperformed, including information technology, communication services, and utilities, while financials fell notably on the heels of the aforementioned bank failures.

Manufacturing retracted, while services advanced, according to purchasing managers surveyed. Labor remained strong, with 311,000 new jobs added. Hourly earnings rose by $0.08 for the month and 4.6% since February 2022. The Consumer Price Index rose 0.4% after falling 0.5% the previous month. The PCE price index increased 0.3% and 5.0% over the past 12 months. The economy advanced at an annualized rate of 2.6% in the fourth quarter, short of the 3.2% increase in the third quarter. Crude oil prices and the dollar declined, while gold prices climbed higher.

Information accredited to Broadridge.

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In the penultimate week of 2022, the stock market experienced typical end of year volatility. Generally, this resulted in stocks rounding out the week at a lower point.

Investors React to Inflation Data Amidst End of Year Volatility

Notably, the latest inflation data came out last week, sparking the end of year volatility. According to the Bureau of Economic Analysis, inflation rose by only 0.1% in November 2022.

Now, investors digest this information while simultaneously anticipating the Federal Reserve’s response. After more than a year of record inflation levels, investors hope this marks the latest sign that inflationary pressures reached their peak. If this is the case, the data might influence the Federal Reserve to scale back its interest rate hikes.

China Experiences Surge in COVID-19 Cases

Further fueling the end of year volatility, China revealed news of their latest surge in COVID-19 cases. Due to this news, investors potentially expect further government-imposed lockdowns. If this occurs, the lockdowns hold heavy potential to influence the global economy.

Diving into the numbers, Ten-Year Treasury Yields advanced the most since April 2022. Meanwhile, the dollar edged lower. On the other hand, gold prices climbed higher. Finally, crude oil prices increased for the second week in a row. As a result, crude oil prices approach $80.00 per barrel.

Eye on the Week Ahead After End of Year Volatility

Despite last week’s end of year volatility in the stock market, trading tends to die down during the final week of the year. Typically, investors take a break while preparing for the new year.

Additionally, very little economic reporting comes out between Christmas and New Year’s Day. In the meantime, investors look towards the Federal Reserve for updated projections on their increases to the federal funds rate.

To reevaluate your financial goals in 2023, contact the financial advisors at IHT Wealth Management.

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Information accredited to Broadridge.

After a year of record inflation levels, November 2022 Personal Income rose. On the contrary, manufactured durable goods faced a decrease after three months of increases. Finally, the latest report from the U.S. Energy Administration showed that gas prices slid last week.

Consumer Spending Rises with Personal Income Increase

Personal income and disposable (after-tax) income rose 0.4% in November, according to the latest data from the Bureau of Economic Analysis. Consumer spending, as measured by personal consumption expenditures, rose 0.1%.

Consumer prices edged up 0.1% in November. Prices, less food and energy, increased 0.2%. Since November 2021, consumer prices have increased 5.5%, lower than the 12 months ended in October (6.1%).

Decrease in November Manufactured Durable Goods as Personal Income Increases

Aside from the November 2022 Personal Income data, new orders for manufactured durable goods decreased 2.1%. This follows three consecutive monthly increases. Excluding transportation, new orders increased 0.2%.

On the other hand, excluding defense, new orders decreased 2.6%. Transportation equipment drove the decrease in new orders, falling 6.3% following three consecutive monthly increases.

Gas Prices Slide According to the U.S. Energy Administration

Retail prices for regular gasoline continued to slide last week. According to the U.S. Energy Administration, the national average retail price for regular gasoline was $3.120 per gallon on December 19, $0.119 per gallon below the prior week’s price and $0.175 lower than a year ago.

Also as of December 19, the East Coast price decreased $0.107 to $3.118 per gallon; the Gulf Coast price fell $0.086 to $2.641 per gallon; the Midwest price declined $0.123 to $2.911 per gallon; the West Coast price dropped $0.164 to $3.983 per gallon; and the Rocky Mountain price decreased $0.141 to $3.086 per gallon. Residential heating oil prices averaged $4.606 per gallon on December 19, $0.261 above the previous week’s price and $1.262 per gallon more than a year ago.

To discuss your portfolio management strategy for 2023, contact the financial advisors at IHT Wealth Management.

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Last week, the third-quarter GDP data came out. In the final estimate for third-quarter gross domestic product, the latest data told the story of an accelerating economy.

Third-Quarter GDP Exceeds Expectations

The final estimate for the third-quarter gross domestic product showed the economy accelerated at an annual rate of 3.2%. Thus, the third-quarter GDP figures exceeded expectations.

Earlier in 2022, GDP declined 1.6% in the first quarter. Similarly, it fell 0.6% in the second quarter of 2022. That said, this most recent report reflects a break in the pattern.

Exploring the Increase in Third-Quarter GDP Data

When exploring the increase in third-quarter GDP data, the story begins with advances in exports. Likewise, federal, state, and local government spending also rose alongside consumer spending. Last but not least, nonresidential fixed investment climbed.

However, these increases faced offsetting pressure by decreases in residential fixed investment and private inventory investment. Imports, which are a negative in the calculation of GDP, decreased. The personal consumption expenditures price index, a measure of inflation, increased 4.3% in the third quarter, lower than the 7.1% advance in the second quarter.

GDP Rises Alongside Stock Market Volatility

Overall, the stock market experienced a great deal of volatility in the penultimate week of 2022. However, investors keep their eyes on the latest inflation figures, which indicate that the Federal Reserve’s increases to the federal funds rate are reducing inflationary pressures.

Also worth noting, China experienced a surge in COVID-19 cases. This does indicate the possibility of another lockdown. Such an event would influence the global economy, potentially impacting the first-quarter GDP figures in 2023. However, after declines in the first two quarters of 2022, the third-quarter GDP report shows that the economy is once again beginning to accelerate heading into the new year.

To discuss your portfolio management strategy for 2023, contact the financial advisors at IHT Wealth Management.

Want to read about the rest of the week ending on December 17th? Explore our additional resources below.

Information accredited to Broadridge.

Last week, the latest real estate data revealed a weakening in the November 2022 housing sector. In the headline story, sales of existing homes fell for the tenth straight month.

Further complicating the United States real estate market, building permits and housing starts similarly declined. However, new single-family home sales increased for the second month in a row. This offers a beacon of hope to the real estate scene as 2022 comes to a close.

Existing Home Sales Plummet for Tenth Month in a Row

For the tenth month in a row, existing home sales plummeted, weaking the November 2022 housing sector. Statistically, home sales declined 7.7% in November. In addition, it reflects a 35.4% plunge in year-over-year home sales.

Similarly, existing single-family home sales experienced a 7.6% drop from the previous month. This marks a 35.2% drop since November 2021.

Reasons for Weaking November 2022 Housing Sector

According to the National Association of Realtors®, the rapid increase in mortgage rates coupled with low inventories hurt housing affordability. Furthermore, these factors brought sales activity to levels resembling those that existed during the COVID-19 lockdown.

Holistically, total housing inventory in November represented a supply of 3.3 months, unchanged from October. Naturally, this falls well below the equilibrium point of 6.0. The median existing home price for all housing types in November dropped to $370,700. Although this shows a decrease of 2.2% from October ($378,800), it does indicate a 3.5% increase from the November 2021 price of $358,200. The median existing single-family home price was $376,700 in November, down from $384,600 in October but up from the November 2021 price of $365,000.

Building Permits and Housing Starts Declined

Building permits and housing starts also fell amongst the November 2022 housing sector detractors. First, the number of issued building permits and housing starts declined in November from the previous month. Authorized building permits dropped 11.2% below the October rate. This marks a 22.4% decrease compared to the November 2021 pace. In November, issued building permits for single-family home construction also declined 7.1% under the October figure.

Meanwhile, November housing starts in November slid 0.5% below the October estimate. Statistically, this demonstrates a 16.4% a drop under the November 2021 rate. Notably, single-family housing starts fell 4.1% compared to the previous month’s tally.

New Home Sales Reflect Beacon of Hope for November 2022 Housing Sector

On a more optimistic note, home completions rose by 10.8% in November, 6.0% higher than the prior year’s total. In November, single-family home completions were 9.5% above the October rate.

Sales of new single-family homes increased for the second straight month in November, advancing 5.8% above the revised October rate. However, sales are down 15.3% from November 2021. Inventory of available single-family homes for sale stood at 8.6 months, down from the October rate of 9.3 months. The median sales price of new single-family homes sold in November was $471,200 ($484,700 in October), while the average sales prices was $543,600 ($533,400) in October.

For help with real estate investments, contact the financial advisors at IHT Wealth Management.

Want to read about the rest of the week ending on December 17th? Explore our additional resources below.

Information accredited to Broadridge.

For the week ending December 17th, 2022, unemployment insurance saw 216,000 new claims. This represents an increase of 2,000 compared to the prior week’s unemployment insurance claims.

Examining Prior Unemployment Insurance Claims in December

According to the Department of Labor, the advance rate for insured unemployment claims for the week ending December 10th was 1.2%. This figure remained unchanged from the previous week’s rate.

However, the advance number of those receiving unemployment insurance benefits during the week ending December 10th came in at 1,672,000. This marks a decrease of 6,000 from the previous week’s level. Later, analysts revised this statistic by 7,000.

Taking a Look at States with the Highest Unemployment Rates in December

For the week ending on December 3rd, Alaska led the pack of states with the highest unemployment rate. Alaska’s percentage came in at 2.3%. Following Alaska, the Department of Labor reported Puerto Rico (2.1%), California (2.0%), New Jersey (2.0%), Montana (1.7%), Minnesota (1.7%), New York (1.6%), Rhode Island (1.6%), Massachusetts (1.5%), and Washington (1.5%), respectively.

Notably, the week of December 10th had a different makeup for the states with the largest increases in initial claims for unemployment insurance. Connecticut led the roster with +471. Following Connecticut, we saw the District of Columbia (+237), Nevada (+157), Kentucky (+153), and Illinois (+138). On the decline, New York saw the biggest drop at -7,134. New York was then followed by California (-4,830), Georgia (-4,273), Texas (-3,954), and Pennsylvania (-2,669).

Unemployment Insurance Claims Rose for the Week Ending on December 17th

Conclusively, unemployment insurance claims rose for the week ending on December 17th. As 2022 winds down, investors expect to see a slowdown in trading activity.

To begin your financial planning strategy for 2023, contact the financial advisors at IHT Wealth Management.

Want to read about the rest of the week ending on December 17th? Explore our additional resources below.

Information accredited to Broadridge.