Stock Market Performance Shows Resiliency Despite Bank Crisis and Global Economy Concerns

The first quarter of 2023 has been marked by resiliency in the US stock market despite ongoing concerns related to the bank crisis and questions about the global economy. In March 2023, stocks were higher with S&P 500 up by about 1.1%, Dow Jones Industrial Average higher by 0.7%, and Nasdaq Composite rising by 1.4%.

Gains in Nasdaq, S&P 500, but fall in Dow

Nasdaq is expected to wrap up the quarter with a remarkable 12% gain while the S&P 500 is expected to rise by more than 3%. However, Dow is likely to register a fall of around 2.2% this year as compared to last year’s figures when Nasdaq fell almost 30%, S&P lost over 18%, and Dow fell by 9%.

Micron Technology and Lululemon Highlight Early Trading Session

Earnings from Micron Technology and Lululemon were key highlights early in the trading session. Micron shares were up more than 6% after suggesting that the chip business could be turning a corner with the potential positive impacts of AI advances in the industry. Lululemon shares were also up as much as 13% following their report of top and bottom-line results that beat estimates, with a whopping 30% increase in revenue in Q4.

Other Market Factors Impacting Performance

Crude oil prices have been volatile with Wednesday’s trading near $73 while the yield on the benchmark 10-year Treasury note was near 3.55%. Bitcoin rose more than 5% to trade north of $28,000, gaining more than 70% so far this year.

On Tuesday, major stock indexes experienced a slight decline due to lack of major negative news from the financial sector, but investors remain concerned about the consequences of the recent sector turmoil, potential spillover effects on the economy, rising interest rates, and tightening lending conditions.

Federal Reserve Policy and Other Economic Indicators

The trajectory of Federal Reserve policy can be revealed with the publication of the PCE inflation gauge for February on Friday. Reduced concerns about a credit crunch helped push up government bond yields, particularly the 2-year Treasury yield. Communication services and information technology sectors experienced a drop in stocks due to an uptick in bond yields.

Tuesday’s data showed a slight increase in the deficit in goods and an increase in retail and wholesale inventories. The S&P Case Shiller home price index showed a decrease in prices from December to January, but year-over-year prices are still up.

Moreover, US consumer confidence in March beat forecasts. This indicates job market strength and consumer hopes for economic improvements.

Easing Fears Over Banking Industry Struggles

While concerns regarding the banking industry continue to persist despite the resiliency of the US stock market, certain developments have eased those fears. S&P 500 rose by 1.1% and Nasdaq composite by 1.5%. Regulatory actions on banks, including a takeover by UBS of Credit Suisse, have calmed some worries. The vast majority of financial stocks in the S&P 500 were rising.

The Federal Deposit Insurance Corp. announced the sale of Silicon Valley Bank’s assets and announced programs to help banks raise cash more easily. Easing fears about the banking system have helped Treasury yields stabilize.

Analysts are split on whether the Fed will raise interest rates or take a pause as many professionals on Wall Street are taking the Fed at its word. They say rate cuts would likely come more quickly only if the economy is in serious trouble.

Overall, despite ongoing concerns related to the bank crisis and the global economy, the US stock market has shown resiliency in March 2023.

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