-Darren Leavitt, CFA

US equity indices hit another set of all-time highs in what was a very busy week on Wall Street.  First-quarter earnings season kicked off, with US Banks showing impressive results.  Markets were well bid throughout the week and moved higher despite news that J&J’s Covid vaccine usage was halted due to some adverse effects and that the US will impose more sanctions on Russia.  Investors also got a full plate of economic news that showed robust retail sales and in-line consumer prices.

For the week, the S&P 500 was up 1.4%, the Dow added 1.2%, the NASDAQ increased 1.1%, and the Russell 2000 tacked on 0.9%.  Perhaps the story of the week was in the bond market that was able to dismiss strong economic data and rally.  The 2-year note yield increased one basis point to 0.16%, while the 10-year yield decreased by ten basis points to close at 1.57%.  Gold prices rose 2% or $35.70 to close at $1780.20 an Oz.  Oil prices gained 6% on the week, with WTI prices up $3.95 to close at 63.16 a barrel.

US banks showed an impressive first-quarter.  Goldman Sachs, JP Morgan, Bank of America, Wells Fargo, and Citi all produced better than expected results.  Trading departments had solid results, and lighter than expected loan loss provision use were highlights.  Interestingly most of the banks sold off after their announcements suggesting that much of the good news was already baked into their stock prices.  Weak consumer loan demand tempered the results, but most think this demand will pick up in the second half and that the banks are in the best financial shape in decades.

Blood clot issues caused the CDC and FDA to halt the use of J&J’s Covid vaccine.  The halt will allow doctors and scientists to study the adverse effects and assess if further usage is safe.  The news undoubtedly hurt vaccine sentiment and may curtail the use of J&J’s vaccine. Still, shots continued to go into arms, and Pfizer announced that it would be able to provide more doses than had previously been expected.

An increased Russian military presence along the Ukrainian border has concerned US officials and their European allies.  In response, the Biden administration announced a new set of sanctions against Russia to keep US institutions from buying Ruble-denominated Russian sovereign debt.   The move will likely be met with a countermeasure from the Russians, and any escalation could certainly weigh on financial markets.

Economic news was much better than expected.  The much anticipated CPI print was in line with expectations.  Headline CPI came in at 0.6% or 1.6% on a year over year basis.  Core CPI, which strips out food and energy, also came in line with consensus estimates at 0.3%.  March Retail sales came in at a whopping 9.8%, much better than estimates of 6%.  Initial claims were also much better than expected, coming in at 576k versus 705k.  Continuing claims came in at 3.731 million from 3.727 million in the prior week.

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