- The CPI rose at an annual pace of 1.7% in February, while the PPI increased 2.8%
- The much anticipated $1.9 trillion coronavirus relief package was signed into law last week
- The NASDAQ Composite Index fell 10.6% from February 12 through March 8
Top Three Market Headlines
Inflation Pressures Grow in February: Product price data released last week pointed to a gradual acceleration in inflation in February as the economy continued to reopen. According to the Department of Labor (DOL), the Consumer Price Index (CPI) rose by 1.7% over the prior year, faster than the 1.4% pace recorded in January. Over the 12 months through February, the food and energy indexes increased 3.6% and 2.4%, respectively. Compared to the prior month, gasoline prices surged 6.4% in February. The rise in inflation was more pronounced at the producer level, as the DOL reported that the Producer Price Index (PPI) jumped 2.8% in February from the prior year, the largest increase since October 2018.
Additional Fiscal Stimulus Bill Finalized: The latest coronavirus relief bill, sporting a $1.9 trillion price tag, was finalized and signed into law by the U.S. government last week. The package, the third passed in the last 12 months, provides additional direct payments to consumers, extended jobless benefits, money for coronavirus test sites, and financial aid to state and local governments, among other things. As the bill had been widely anticipated by Wall Street, its passage had little direct impact on markets, though investors will be closely monitoring its effect on consumer spending in upcoming months.
NASDAQ Index Sees Correction: Driven by a recent sell-off in technology stocks, the NASDAQ Composite Index officially entered into correction territory last Monday, finishing down 10.6% from its February 12 record high. Technology stocks, which comprise approximately 50% of the index, have come under pressure lately as rising bond yields have led investors to question valuations in the sector. The correction proved short-lived, however, as the index rallied 3.7% the following day and went on to recover almost 6% through the end of the week. Notwithstanding its recent weakness, the index’s trailing one-year return as of week’s end remained a stout 85%, reflecting its vigorous rebound since mid-March of last year.