Market Data as of Week Ending: 03/04/2022 unless noted otherwise
U.S. stock prices declined as Russia’s invasion of Ukraine escalated and Russia was charged with a wide range of sanctions. With only a few exceptions, these sanctions have effectively closed off Russia, the world’s ninth largest by population and eleventh largest by GDP, to the most of their key trading partners around the globe. Growth stocks lagged their value counterparts while large companies generally outperformed their smaller company peers. The price of oil surged to more than $115 per barrel and the energy sector gained more than 9%. Traditionally defensive sectors such as healthcare, real estate, and utilities were once again among the best performing sectors while financials and technology stocks significantly lagged. Both developed foreign and emerging markets significantly lagged U.S. stocks for the second consecutive week.
U.S. Treasury yields declined as the 10-year ended the week at 1.73%. In another turbulent week for bonds, characterized by increased volatility, higher quality government bonds were the best performing segment. Investment grade corporate bonds also delivered solid gains and long duration outperformed short duration bonds. Despite risk aversion in the stock market, yields narrowly declined for investment grade corporate bonds whereas high yield corporate bonds edged higher and finished the week at 3.1% and nearly 6.0%, respectively.
Economic data releases were mostly positive but continue to be overshadowed by the crisis in Ukraine. The job market continues to remain attractive as there were 678,000 jobs added in February, well above the consensus estimate. The unemployment rate dropped to 3.8% and initial jobless claims fell to 215,000, near the lowest levels on record. ISM reported that Manufacturing PMI beat consensus estimates and rose for a second straight month to 58.6 in February. Services PMI was more sanguine and declined to 56.5 for the month of February. China, which has been struggling to re-accelerate domestic growth, has not joined major countries in implementing sanctions against Russia. The commercial real estate market in China remains fragile and recent PMI data shows that the manufacturing and services sectors are only narrowly in growth territory at 50.4 and 50.2 respectively.