Market preps for Fed

  • Broad market declines, small caps most resilient
  • Commodities surge and retreat, inflation still hot
  • This week: FOMC meeting, PPI, retail sales

With spring a little more than a week away, the head-spinning day-to-day volatility that has characterized the 2022 stock market so far this year was in full display last week.

The S&P 500 (SPX) kicked off last week with its biggest down day (-3%) since October 2020, then posted its biggest up day since June 2020 (+2.6%) on Wednesday and, thanks to a late-Friday sell-off, logged its biggest down week since January:

Chart 1: S&P 500 (SPX), 1/28/22–3/11/22. S&P 500 (SPX) price chart. Day-to-day volatility.

Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)

The headline: Stocks test late-February lows with Fed meeting on deck.

The fine print: The Fed is expected to raise interest rates by 0.25% on Wednesday, and last Thursday brought another reminder of why: The Consumer Price Index’s (CPI) 7.9% year-over-year increase marked another 40-year high for the inflation gauge.

The moves: Oil, gold, palladium, and wheat were among the commodity markets that spiked to multi-month or all-time highs early last week before pulling back almost as sharply.

The scorecard: The small-cap Russell 2000 (RUT) was the top-performing major US index for the fifth time in the past six weeks:

US stock index performance table for week ending 3/11/22. S&P 500 (SPX), Nasdaq 100 (NDX), Russell 2000 (RUT), Dow Jones Industrial Average (DJIA).

Source (data): Power E*TRADE. (For illustrative purposes. Not a recommendation.)

Sector roundup: The strongest S&P 500 sectors last week were energy (+1.9%), utilities (-0.8%), and materials (-1.6%). The weakest sectors were consumer staples (-5.8%), information technology (-3.8%), and communication services (-3.1%).

Highlight reel: On Monday Bed Bath & Beyond (BBBY) +34% to $21.71, Bumble (BMBL) +42% on Wednesday. On the downside, Inspirato (ISPO) -37% to $26.65 on Monday -43% to $15.25 on Tuesday.

Futures action: April WTI crude oil (CLJ2) jumped to $130.50/barrel early last week—its highest level since 2008—before retreating and closing Friday below $110. April gold (GCJ2) spiked to $2,078.80/ounce last Tuesday—the first time the market had topped $2,000 since August 2020—but like oil, pulled back the remainder of the week and closed Friday below $1,990. Biggest up moves: May canola (RSK2) +5.3%, May soybean oil (ZLK2) +4.4%. Biggest down moves: May lumber (LBSK2) -27.7%, May hard red wheat (KWK2) -6%.

Coming this week

All eyes (and ears) will be on Wednesday’s Fed announcement, but this week also includes another inflation reading, retail sales, and housing numbers:

Tuesday: Producer Price Index (PPI)
Wednesday: Retail Sales, Import Price Index, NAHB Housing Market Index, Business Inventories, Fed interest rate announcement
Thursday: Housing Starts and Building Permits, Industrial Production and Capacity Utilization
Friday: Existing Home Sales, Leading Economic Indicators Index

This week’s earnings include:

Today: Vail Resorts (MTN), Calavo Growers (CVGW)
Tuesday: ANI Pharmaceuticals (ANIP), Dole (DOLE)
Wednesday: Lands' End (LE), RumbleON (RMBL), Jabil (JBL), BRC (BRCC), Lennar (LEN)
Thursday: Dollar General (DG), Commercial Metals (CMC), Canadian Solar (CSIQ), Accenture (ACN), FedEx (FDX)
Friday: On Holding (ONON)

Check the Active Trader Commentary each morning for an updated list of earnings announcements, IPOs, economic reports, and other market events.

Market Mover Update: EPAM Systems (EPAM), a US tech firm whose biggest software development center in Ukraine, ended last week with an 8.x% Friday rally. The stock tumbled 46% on February 26 (two days after Russia invaded Ukraine) when the company suspended guidance (see “Sell-offs: Buying stock vs. options”).


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