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Market Recap
WEEK OF MAR. 20 THROUGH MAR. 24, 2023
The S&P 500 index rose 1.4% last week, led by the communication services and energy sectors, as comments from the Federal Reserve's Federal Open Market Committee sparked hopes for a slower pace of rate increases.
The market benchmark ended Friday's session at 3,970.99, up from the previous Friday's closing level of 3,916.64. The index is now up 3.4% for the year to date and nearly flat for the month of March.
The weekly climb came as the US central bank's Federal Open Market Committee on Wednesday raised its benchmark lending rate by 25 basis points, as expected, and reaffirmed its 2023 median rate outlook at 5.1%.
In a statement, the committee said "some additional policy firming may be appropriate," removing reference to "ongoing increases in the target range will be appropriate."
The change in language was seen as a sign the FOMC sees its rate increases becoming less frequent. This was a welcome indication for investors especially at a time when tensions have been running high following several recent bank failures.
By sector, communication services had the largest percent increase of the week, up 3.4%, followed by a 2.3% climb in energy, a 2.1% rise in materials and a 2.0% increase in technology. Other gainers included health care, consumer staples, industrials, financials and consumer discretionary.
There were just two sectors in the red: real estate fell 1.4% and utilities slipped 1.2%.
The gainers in the communication services sector included Facebook parent Meta Platforms (META). Shares rose 5.3% last week amid positive reactions to the social network operator lowering its 2023 expense forecast last Friday due to layoff plans. Among the positive reactions, analysts at Morgan Stanley as well as KeyBanc Capital Markets upgraded their investment ratings on Meta's stock.
In the energy sector, shares of Pioneer Natural Resources (PXD) rose 5.6% as Citigroup upgraded its investment rating on the stock to buy from neutral. The firm also raised its price target on Pioneer Natural's shares to $210 each from $193.
In the materials sector, shares of WestRock (WRK) rose 5.7% as Citigroup upgraded its investment rating on the paper and packaging company's stock to buy from neutral.
On the downside, the decliners in real estate included Extra Space Storage (EXR), whose shares fell 4.0% amid a Bloomberg report that Life Storage (LSI) may receive a takeover proposal from Extra Space Storage. Extra Space is working with an adviser on a potential proposal, but plans aren't final and may change, the Bloomberg report said, citing people with knowledge of the details.
Economic data set to be released this week will include March US consumer confidence on Tuesday, February pending US home sales on Wednesday, and the latest reading of Q4 gross domestic product on Thursday. However, investors are likely to place the most attention on the release of February personal consumption expenditures, a key inflation reading, on Friday. A final reading on March consumer sentiment is also expected on Friday.
