March market recap (ADV)
Despite inflation, economic backdrop remains favorable (ADV)
March market review
The volatility of recent months continued in March, driven by geopolitical events that we believe are unlikely to dissipate soon, a more hawkish Federal Reserve and higher prices. Despite headwinds, domestic equity markets rallied toward the end, making up for some of the earlier losses. The general economic backdrop remains favorable as U.S. consumers, flush with cash, continue to spend despite rising prices; manufacturing and business spending remain healthy; and the labor market remains robust.
Key takeaways for the month:
- As expected, the Federal Open Market Committee raised the federal funds rate 25 basis points at its March meeting and indicated that further increases will be needed to return inflation to its 2% goal.
- The Russian invasion of Ukraine has lifted oil prices globally, exacerbating inflation and prompting renewed interest in alternative energy sources.
- Earnings trends remain solid and valuation multiples have become more compelling. In addition, we believe that higher Treasury rates coupled with wide spreads and increased municipal/Treasury ratios should bode well for income buyers in both the corporate and municipal markets.
The bottom line: Overall, we believe that volatility tied to geopolitical risk is likely to persist over the medium term and adds complexity to the global economic outlook. Despite uncertainty, the U.S. economy looks to have room to grow, and higher equity prices seem likely. We are constructive on equities and believe that investors should view temporary choppiness as a buying opportunity.
As always, we will be sure to keep our eyes on the markets and relay anything relevant. If you have any questions, please feel free to reach out at your convenience. Thank you for your confidence in us.
The financial markets and our office will be closed on April 15 for Good Friday. As always, you can securely access your accounts through Raymond James Client Access – whenever, wherever.
Investing involves risk, and investors may incur a profit or a loss. All expressions of opinion reflect the judgment of the authors and are subject to change. There is no assurance the trends mentioned will continue or that the forecasts discussed will be realized. Past performance may not be indicative of future results. Economic and market conditions are subject to change. The S&P 500 is an unmanaged index of 500 widely held stocks. An investment cannot be made in this index. Investing in the energy sector involves special risks, including the potential adverse effects of state and federal regulation and may not be suitable for all investors. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Investing involves risk and you may incur a profit or loss regardless of strategy selected. The forgoing is not a recommendation to buy or sell any individual security or any combination of securities. Be sure to contact a qualified professional regarding your particular situation before making any investment or withdrawal decision.
Material prepared by Raymond James for use by its advisors.