Equity and fixed income markets traded at February lows last week as hotter inflation and weaker corporate earnings disappointed investors. The S&P 500 Index fell 2.66% but was overshadowed by the weakness in growth stocks, with the NASDAQ Composite declining 3.31%, while the Dow Jones Industrial Average turned negative for the year. The Bloomberg US Aggregate Bond Index ended the week lower by 0.89%.1

The core Personal Consumption Expenditures Price Index, the Fed’s preferred measurement of inflation, increased 0.6% in January and 4.7% year on year, the Commerce Department reported on Friday. Wall Street had been expecting readings of 0.5% and 4.4%, respectively. Including the volatile food and energy components, headline inflation increased 0.6% month on month and 5.4% year on year. The report added to worries that the Fed may have to keep rates higher for longer to quell inflationary pressures.2

Two key bellwether companies, Home Depot and Wal-Mart, reported earnings. “The big-box Dow Jones retailers both offered cautious outlooks for the year ahead. Walmart easily beat Q4 EPS views with revenue also topping. Home Depot topped profit targets, but revenue fell just short. The home improvement giant said it'll spend an extra $1 billion to boost pay for front-line workers. Walmart stock rose Tuesday on earnings but fell for the week. Home Depot fell sharply, weighing on Lowe's and several other housing-related retailers.”3

We also saw further confirmation that higher interest rates are having a dampening effect on the housing market, an area closely watched by the Fed. U.S. existing home sales in January fell to their lowest level in more than 12 years. However, “the pace of decline slowed, raising cautious optimism that the housing market slump could be close to reaching a bottom. The report from the National Association of Realtors on Tuesday also showed the smallest increase in annual house prices since 2012, which should help to improve affordability. It will, however, be a while before the housing market turns the corner.”4

As investors digested both the earnings news and the higher-than-anticipated inflation, expectations for further rate increases were being priced into the markets. The CME FedWatch Tool is now forecasting a 50% probability that the Fed Funds rate will rise 25bps at each of the next three Federal Reserve meetings.5

Thank you for your confidence in our team,

Asset Management Department

Sequoia Financial Group


  1. Morningstar Direct
  2. https://www.cnbc.com/2023/02/23/stock-market-today-live-updates.html.
  3. https://www.investors.com/news/stock-market-sells-off-as-inflation-reviv...
  4. https://www.reuters.com/markets/us/us-existing-home-sales-fall-january-p...
  5. https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html



The views expressed represent the opinion of Sequoia Financial Group. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness. While Sequoia believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and Sequoia’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in equity securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. Past performance is not an indication of future results. Investment advisory services offered through Sequoia Financial Advisors, LLC, an SEC Registered Investment Advisor. Registration as an investment advisor does not imply a certain level of skill or training.

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Investment advisory services offered through Sequoia Financial Advisors, LLC, an SEC Registered Investment Advisor. Registration as an investment advisor does not imply a certain level of skill or training.

Weaker Corporate Earnings and Hotter Inflation Send Markets Lower | Sequoia Financial Group


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