With three days of daily losses greater than 1%, the SP 500 gave back the majority of this years gains and closed at 3,861. Spurred by Fed Chair Powells comments that interest rates may need to go higher for longer, on Tuesday the S&P 500 slid 1.53% to close below the key 4,000 threshold. This was accompanied by a spike in bond yields with the rate on the 2-year Treasury surpassing 5% and touching its highest level since 2007. Thursday was another of those 1% or greater loss days and saw the S&P 500 closing below its 200 day Moving Average (MA) support level. While Fridays February jobs report gave some hints that inflation could be slowing, this was overshadowed by the turmoil in the banking sector. Regulators closed Silicon Valley Bank (SVB) after deposit outflows and a failed capital raise plunged the country's 16th largest bank into crisis, making it the first bank to fail since 2020 and largest bank to fail since the height of the 2008 financial crisis. As a result, this failure is also fueling concerns over whether the contagion spreads beyond SVB as several other bank stocks were halted trading on Friday. From a technical perspective, the S&P 500 crossed below both its 50 and, as noted above, its 200 day MAs this week. The one plus I did see was that in after hours trading on Friday the S&P 500 did regain 15 points in the last 10 minutes before 1700. For next week the big news will be Tuesdays Core Inflation and Wednesdays Producer Price inflation reports. For TSP TIPS, the C fund mimicked the S&P 500 falling below its 200 MA and took along the S fund. That said, the I fund price did cross below its 50 MA but remains well above its 200 MA and is the only one of the TSP equity funds (C/S/I) to have a positive Performance Ranking. On the plus side, the F fund crossed above both its 20 MA and 50 MAs this week for the first time in a month. As such we are recommending the following new investment mix.
With three days of daily losses greater than 1%, the SP 500 gave back the majority of this years gains and closed at 3,861. Spurred by Fed Chair Powells comments that interest rates may need to go higher for longer, on Tuesday the S&P 500 slid 1.53% to close below the key 4,000 threshold. This was accompanied by a spike in bond yields with the rate on the 2-year Treasury surpassing 5% and touching its highest level since 2007. Thursday was another of those 1% or greater loss days and saw the S&P 500 closing below its 200 day Moving Average (MA) support level. While Fridays February jobs report gave some hints that inflation could be slowing, this was overshadowed by the turmoil in the banking sector. Regulators closed Silicon Valley Bank (SVB) after deposit outflows and a failed capital raise plunged the country's 16th largest bank into crisis, making it the first bank to fail since 2020 and largest bank to fail since the height of the 2008 financial crisis. As a result, this failure is also fueling concerns over whether the contagion spreads beyond SVB as several other bank stocks were halted trading on Friday. From a technical perspective, the S&P 500 crossed below both its 50 and, as noted above, its 200 day MAs this week. The one plus I did see was that in after hours trading on Friday the S&P 500 did regain 15 points in the last 10 minutes before 1700. For next week the big news will be Tuesdays Core Inflation and Wednesdays Producer Price inflation reports. For TSP TIPS, the C fund mimicked the S&P 500 falling below its 200 MA and took along the S fund. That said, the I fund price did cross below its 50 MA but remains well above its 200 MA and is the only one of the TSP equity funds (C/S/I) to have a positive Performance Ranking. On the plus side, the F fund crossed above both its 20 MA and 50 MAs this week for the first time in a month. As such we are recommending the following new investment mix.