The rise in long-term interest rates weighed on stocks last week. The Dow Jones Industrial Average fell 0.46 percent, the S&P 500 Index 0.77 percent, the Nasdaq 0.79 percent, and the Russell 2000 Index 2.77 percent.
The 10-year bond yield closed at 1.73 percent from 1.62 percent last week. The move was driven by hesitant comments from Fed chairman Powell after an uneventful FOMC meeting. In addition, the Fed surprised the markets by not extending an additional leverage ratio that would allow banks to hold more government bonds without reserve support. Analysts expected the Fed to extend the rule to partially slow the rise in long-term bonds. Instead, the Fed focused on providing more liquidity in the short term. In addition, interest rates did not rise on Friday after the news, suggesting that banks either plan to hold their government bonds or were already prepared for the rule change.
Bonds fell across the board as interest rates rose. The iShares iBoxx Investment Grade Corporate Bond (LQD) was down 0.06 percent, the iShares iBoxx High Yield Corporate Bond (HYG) was down 0.49 percent, and the iShares 20+ Year Treasury (TLT) was down 0.98 percent.
FedEx Corp. (FDX) shares rose 6.10 percent on Friday, trading at $ 279.58 after a positive earnings report. They stated that the demand for logistics and delivery services will remain at an increased level in the future.
Royal Caribbean Cruises (RCL) shares rose 2.61 on Friday as it was announced that cruising from the Bahamas to the Caribbean is slated to resume from June. The company is pending approval from the Centers for Disease Control and Prevention to resume cruise operations outside of the United States
SPDR Communication Services (XLC) grew by 0.96 percent over the course of the week. An 8.07 percent rally on Facebook (FB) helped stimulate the sector. SPDR Healthcare (XLV) grew by 0.46 percent. SPDR Energy (XLE) was the weakest sector after crude oil fell to $ 61.44. XLE lost 7.54 percent.
Economic data was strong last week. The Empire State Index of Manufacturing Activity showed the New York Fed region was buzzing in March. The Philly Fed Index more than doubled its forecast, hitting a nearly 50-year high as prices rose the fastest since the 1973 Arab oil embargo.
The National Association of Homebuilders announced that the home builder confidence index fell to 82 in March. This is still well above the level of the previous year and the builders are still very confident, but rising lumber prices are reducing profits. Building permits and housing starts increased year on year by 1.68 million and 1.42 million respectively in February.
The US dollar index spot closed on Friday at 91.92, a slight 0.06 percent.
After falling 7 percent the previous day, prices rose 2.9 percent on Friday to $ 61.72 a barrel for West Texas Intermediate crude and 2.6 percent for Brent crude to $ 64.95 a barrel. This was the largest daily surge in West Texas Intermediate crude oil prices in over two weeks.