S&P 500 Continues 2022's Long Downtrend

The S&P 500 (Index: SPX) continued following its now well-established 2022 downtrend in the first week of March 2022. The index closed out the week at 4,328.87, some 1.3% below where it closed the previous week and 9.8% below its 3 January 2022 record peak of 4,796.56.

That puts the actual trajectory of the S&P 500 well within the alternative futures chart's latest redzone forecast range.

The biggest market-moving news of the week came on Wednesday, 2 March 2022, when Federal Reserve Chair Jerome Powell testified before Congress the Fed's first interest rate change of 2022 will be a quarter-point hike. That change in monetary policy will be officially announced and implemented after the Federal Open Market Committee's 16 March 2022 meeting.

Powell left open the possibility of a half-point rate hike being implemented later in the year, where other Fed minions suggested such a move may come in the first half. That new information gives investors a strong incentive to focus on the upcoming second quarter of 2022 in setting their current day investment decisions. That works well with the redzone forecast, which was built with that assumption.

Here's the rest of the marketing moving news in the week that was:

Monday, 28 February 2022

• Signs and portents for the U.S. economy:
  • U.S. December oil demand hits highest since before pandemic -EIA
    • BP abandoning Russia shows disruption to commodities will be profound: Russell
  • U.S. goods trade deficit hits record high, seen weighing on first-quarter GDP growth
• Bigger trouble developing in China, Japan, and especially in Russia:
  • China's February factory activity likely shrank amid holidays, Olympics
  • Japan's Q1 growth forecast slashed on Omicron hit to consumption: Reuters poll
    • Japan's factory output hit by car production cuts, Ukraine crisis adds to risks
  • International banks, funds and exchanges put Russian sanctions into action
    • Russia's market rout in four charts
    • Russia default 'extremely likely' if Ukraine crisis worsens, banking lobby says
    • Russia hikes rates, introduces capital controls as sanctions bite
• ECB minions jump on chance to avoid shrinking stimulus programs:
  • ECB should hold off on policy moves until Ukraine clarity: Panetta
• S&P 500 ends lower as West hits Russia with sanctions

Tuesday, 1 March 2022

• Signs and portents for the U.S. economy:
  • U.S. construction spending surges in January on homebuilding
  • U.S. manufacturing activity regains speed; supply disruptions loom from Russia-Ukraine conflict
  • $10 toothpaste? U.S. household goods makers face blowback on price hikes
• Fed minions have a plan to hike U.S. interest rates and intend to follow it:
  • Analysis-Ukraine war won't deter Fed and Co. from March rate hikes
• Bigger trouble developing in Russia:
  • Russian manufacturing shrinks in Feb as new orders fall - PMI
• Mixed economic signs developing in China:
  • China's factory growth picks up as demand improves, Ukraine crisis raises risks
  • China warns of 'huge' pressure on foreign trade as economic challenges mount
• Wall Street ends sharply lower as Ukraine crisis sows fear

Wednesday, 2 March 2022

• Signs and portents for the U.S. economy:
  • U.S. house prices to rise another 10% this year - Reuters poll
  • Oil blasts through $110/bbl, as few alternatives seen to Russian supply
    • Russian oil disruptions escalate, global prices rise
    • Oil, gas, wheat and aluminium jump as Russia sanctions bite
  • U.S. private payrolls rise solidly as labor market continues to gain traction
  • Who can fix the price tags? U.S. businesses hit by labor shortages, inflation
• Fed minions worried about inflation, but will only go with quarter point rate hike in March 2022:
  • Fed's Evans: U.S. inflation extremely high, rates hikes needed
  • Fed's Powell backs quarter point March rate hike; open to bigger moves later
    • Fed's Powell says still appropriate to raise interest rates by 25 bps in March
• Bigger trouble developing in Russia and the Eurozone:
  • Russian inflation accelerates to 9.05% as rouble slips
    • Analysis-Ukraine war raises spectre of Russia's first external debt default
  • Euro zone inflation soars to new high, intensifying ECB dilemma
• Bank of Canada minions hike rates, ECB minions worry about Eurozone stagflation:
  • Canada's major lenders lift prime rates to 2.7% after central bank hike
  • ECB's Centeno warns of 'stagflation' from Russia-Ukraine conflict
• Wall Street ends sharply higher, Powell assuages rate worries

Thursday, 3 March 2022

• Signs and portents for the U.S. economy:
  • Oil slides from decade-highs as Iran talks kindle supply hopes
    • Analysis-Oil price surge revives Wall Street fears of 1970s-style stagflation
  • U.S. weekly jobless claims fall; service industry activity slows further
  • Gas and aluminium hit fresh records; oil, wheat soar on supply turmoil
  • U.S. factory orders growth beats expectations in January
• Fed minions say U.S. economy isn't in stagflation:
  • NY Fed's Williams says U.S. economy not in stagflation scenario
  • Fed's Powell: Ukraine war impact uncertain but could hit spending, investment
• Russian debt downrated to junk:
  • Fitch, Moody's slash Russia's sovereign rating to junk
  • S&P drags Russia's rating deeper into junk territory
• Eurozone economy showing signs of life and inflation, Japan not so much:
  • Euro zone unemployment at record lows, producer prices show record jump y/y
    • Euro zone business growth accelerated in Feb as Omicron faded -PMI
  • Japan's service sector activity contracts at fastest pace in 21 months - PMI
• ECB minions thought about rate hikes in February, moving on to think about other things:
  • ECB policymakers saw rate hike drawing closer in February
    • Column-Might the ECB be tempted to prop up the euro?: McGeever
• Wall Street ends lower as war in Ukraine stirs uncertainty
  • Wall Street pushes on with measures to remove Russian assets

Friday, 4 March 2022

• Signs and portents for the U.S. economy:
  • U.S. job growth surge highlights economy's strength as headwinds rise
  • Oil jumps 7% as Ukraine conflict offsets Iran supply hopes
  • Food prices jump 24.1% yr/yr to hit record high in Feb, U.N. agency says
• Bigger trouble developing in the Eurozone:
  • Euro zone January retail sales rise weaker than expected
• Wall Street ends down as Ukraine fears eclipse solid jobs data

The CME Group's FedWatch Tool continues to project six quarter point rate hikes in 2022, starting in March 2022 (2022-Q1), followed by additional hikes in May 2022 (2022-Q2), June 2022 (2022-Q2), July 2022 (2022-Q3), September 2022 (2022-Q3) and December (2022-Q4). That last rate hike represents the only change from the previous week, as investors expect the Fed will delay this last hike from November 2022.

The Atlanta Fed's GDPNow tool reduced its projection of real GDP growth in 2022-Q1 down to 0.0% in the past week based on the latest update to the quarter's international trade data, which points to a much bigger trade deficit than previously expected.