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Week in Review: Feb.27.2023 - Mar.3.2023

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March 6, 2023

Market Recap


The S&P 500 index rose 1.9% last week, led by the materials sector, as investors were encouraged by stronger-than-expected services sector data and a Fed official's comments supporting a "slow and steady" approach to monetary policy.

The market benchmark ended Friday's session at 4,045.64, up from last Friday's closing level of 3,970.04.

On Tuesday, the S&P 500 closed out February with a 2.6% monthly loss as investors worried about the impacts of inflation and interest rate increases on the economy. Concerns were magnified last month after companies including Home Depot (HD) and Walmart (WMT) issued weaker-than-expected earnings guidance.

However, the index is still up 5.4% for the year to date thanks to a 6.2% January jump that had come on hopes for the pace of rate increases to slow.

While concerns about the pace of rate increases weighed on the market in February, investors found some comfort on Thursday in comments from Atlanta Fed President Raphael Bostic, who told reporters that "slow and steady is going to be the appropriate course of action."

Investors were also encouraged on Friday by two reports showing US services sector activity was stronger than projected in February. The Institute for Supply Management's purchasing managers' index for February came in higher than the consensus estimate and showed a second consecutive month of growth. Separately, S&P's services PMI gauge for February ended a seven-month sequence of contraction and surpassed the consensus estimate. S&P's report also showed year-ahead output expectations were the strongest since May 2022.

The materials sector had the largest percentage increase last week, up 4%, followed by increases of 3.3% each in communication services and industrials. Just two sectors fell: Utilities slipped 0.7% and consumer staples edged down 0.4%.

In the materials sector, shares of Steel Dynamics (STLD) rose 15% on the week as the steel producer and metals recycler reported a 25% boost to its quarterly dividend payment.

In communication services, shares of Facebook parent Meta Platforms (META) climbed 8.8%. The company said it is slashing the price of two virtual reality headsets and it will implement -- either fully or partially -- most of the recommendations made by its independent oversight board regarding its so-called "cross-check" content moderation system.

In industrials, shares of Union Pacific (UNP) gained 7.9% as the railroad company said it expects to name a new chief executive this year that will take over from Lance Fritz, who has been CEO since February 2015. The plan prompted BofA Securities to upgrade its investment rating on Union Pacific's shares to buy from neutral while raising its price target on the stock to $241 each from $218.

On the downside, the decliners in utilities included shares of Sempra (SRE), which fell 2.8% from a week ago as the energy infrastructure company reported Q4 revenue below analysts' mean estimate.

Next week, economic data will be fairly light earlier in the week but all eyes will be on February jobs data later in the week.

January factory orders are due on Monday, followed by January wholesale trade and consumer credit on Tuesday. February private-sector jobs data from ADP will be released on Wednesday, followed by weekly jobless claims on Thursday and the February nonfarm payrolls and unemployment reports on Friday.

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