Big Movers In March 2023
Intel (INTC). New server chips will be available sooner than expected. That spurred hopes of a turnaround in the struggling tech name.
First Republic Bank (FRC): The collapse of Silicon Valley Bank weighed on the California lender, which also had a large proportion of uninsured deposits.
First Solar (FSLR): The green-energy company reported strong quarterly results and guidance, supported by government tax credits.
Zions Bancorp (ZION): The Salt Lake City-based lender fell as anxiety swept regional banks.
Advanced Micro Devices (AMD): Third Point built a position in the semiconductor stock, followed by AI excitement.
Comerica (CMA): The Dallas bank fell along with other regional lenders.
Key Economic Events Last Month
Labor Pressures Eased as Jobs Increased
The U.S. economy added 311,000 jobs in February, 106,000 ahead of estimates. Still, unemployment rose more than expected and wage gains lagged forecasts. That suggested a tight labor market isn’t driving inflation. (10/3)
Housing Starts Jump More Than Expected
Housing starts rose 9.8% to an annual rate of 1.45 million in February, exceeding fo ecasts of 1.32 million. Building permits also surprised to the upside. (16/3)
Fed Hikes but Signals a Potential Pause
The Federal Reserve increased interest rates by 25 basis points as expected. However, its forward projections suggested further tightening could be limited. (22/3)
Consumer Confidence Surprises to the Upside
Consumer confidence rose more than expected in March and February’s reading was revised higher. The improvement resulted from increased spending plans and greater optimism towards the next six months. (28/3)
Key Futures Contracts
| Product Name | Current Month | Expiration | Next Month | 1-Mon% |
|---|---|---|---|---|
| S&P 500 E-Mini (@ES) | ESM23 (June) | 16 Jun 2023 | ESU23 (Sept) | +3.3% |
| *S&P 500 E-Mini Micro (@MES) | MESM23 (June) | 16 Jun 2023 | MESU23 (Sept) | +3.3% |
| Nasdaq-100 E-Mini (@NQ) | NQM23 (June) | 16 Jun 2023 | NQU23 (Sept) | +9.1% |
| *Nasdaq-100 E-Mini Micro (@MNQ) | MNQM23 (June) | 16 Jun 2023 | MNQU23 (Sept) | +9.1% |
| Dow Jones E-Mini (@YM) | YMM23 (June) | 16 Jun 2023 | YMU23 (Sept) | +1.8% |
| *Dow Jones E-Mini Micro (@MYM) | MYMM23 (June) | 16 Jun 2023 | MYMU23 (Sept) | +1.8% |
* Micro contracts are one-tenth the size of standard e-minis.
Events to Watch This Month
| Date | Event | What to Watch |
|---|---|---|
| Fri, 7-April | Non-farm payrolls | Job growth, wages and unemployment. Will recent gains be revised lower? |
| Wed, 12-April | Consumer prices, Fed Minutes |
The consumer price index (CPI) is an important inflation report. Minutes from the last Fed meeting could provide clues on monetary policy. |
| Fri, 14-April | Retail sales, earnings begin | Retail sales are due in the premarket. JPMorgan Chase (JPM) and Citi (C) are the first major companies to report quarterly results. |
| Tue, 18-April | Housing starts, building permits | Will lower interest rates boost the housing market? |
| Thu, 27-April | Gross domestic product | The first of three reports on economic growth in the first quarter. |
Sector Watch
Technology stocks rose as interest rates fell. Cost cuts and excitement over artificial intelligence (AI) also boosted the sector.
Communications stocks advanced as investors returned to big growth names like Meta Platforms, Alphabet and Netflix.
Utilities rebounded from a sharp drop in February. They benefited from lower interest rates.
Financials declined the most as lenders including Silicon Valley Bank and Signature Bank failed.
Noteworthy Calls & Predictions
Neuberger Berman portfolio manager Steve Eisman said recent turmoil in the banking sector is confined to certain regional lenders. Known for shorting financials in 2008, Eisman said the current situation isn’t close to the subprime meltdown.
FinancialsFactSet calculated the S&P 500 could rise 17% in the next year, based on research estimates. The median price targets of analysts for companies in the index translate into a potential move to 4,618. Energy had the most projected upside, while technology had the least, according to FactSet.
StocksBank of America said commercial real estate could be the next danger for U.S. lenders. Higher interest rates and lower occupancy could squeeze regional banks that dominate the market.
FinancialsJeffrey Gundlach, founder of DoubleLine Capital, predicted a recession will begin “in a few months.” The slowdown will drive the Fed to cut interest rates twice, he added.
EconomyEd Yardeni of Yardeni Research predicted S&P 500 will rally to 4,600 by yearend as the Fed halts rate hikes. He said the banking crisis was well-contained and thinks earnings will improve after the first quarter.
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