Week Ending April 1 Financial Markets Update

The S&P 500 Index achieved its third week in a row of positive returns thanks to a Friday session that managed to push the index 1.77 points higher than the previous Friday. The month of March finished on a sour note on Thursday as the index had its worst day in the past twenty and completed a March where the index completed its 13% correction and rallied almost 9% in the back half of the month. Investors responded positively to the disciplined approach by the Fed of raising rates by only a quarter point in the March meeting and proceeded to buy the dip on many beaten down growth names. Several of the FOMC board members expressed an interest in raising rates by 50bps increments in following meetings, including Fed Chair Jay Powell. The labor market continues to be tight with the March unemployment rate nearly reaching the pre-pandemic low of 3.5%.

The Treasury yield curve flattened significantly over the course of the week with short-term Treasury yields rising and long-term Treasury yields falling. On Monday, the 5-year yield briefly rose above the 30-year yield for the first time since 2006. Crude oil also dropped significantly on Monday as China began locking down most of Shanghai, causing investors to speculate that the global demand for oil would drop. On Tuesday, the 2-year yield briefly rose above the 10-year yield, which is widely considered a precursor of past recessions. Optimism for an end to the Russia-Ukraine conflict fueled investors to believe that peace could allow the Federal Reserve to increase interest rates more aggressively. 
The interpretations and organizations of these ideas are the confidential thoughts of 1st & Main Investment Advisors and do not represent the opinions of BFCFSDifferent types of investments involve varying degrees of risk including market fluctuation and possible loss of principal value. There can be no assurance that any specific investment strategy will be profitable. *some content provided by First Trust Portfolios L.P.  Member SIPC and FINR

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