{"id":6670,"date":"2023-03-21T13:05:20","date_gmt":"2023-03-21T19:05:20","guid":{"rendered":"https:\/\/www.keystonefinancial.com\/?post_type=oi_article&p=6670"},"modified":"2023-03-21T13:05:22","modified_gmt":"2023-03-21T19:05:22","slug":"market-commentary-march-21-2023","status":"publish","type":"oi_article","link":"https:\/\/www.keystonefinancial.com\/articles\/market-commentary-march-21-2023","title":{"rendered":"Market Commentary | March 21, 2023"},"content":{"rendered":"\n
Unknowns and uncertainty.<\/p>\n\n\n\n
Financial markets were volatile last week as investors parsed the risks around bank closures, central banks offered additional protections for depositors, and regulators took a harder look at bank balance sheets.<\/p>\n\n\n\n
\u201cFor much of last year, volatility was elevated, but the risks were somewhat \u2018known\u2019 (chiefly inflation and recession)\u2026Now, the introduction of the banking crisis has created a new unknown, which could ultimately mean a sharper increase in volatility (if worse than expected) or a quick reprieve (if fears prove unfounded),\u201d opined a source cited by Nicholas Jasinski of Barron\u2019s.<\/p>\n\n\n\n
Unknown risks create uncertainty, and you know what they say about markets and uncertainty.<\/p>\n\n\n\n
Yields on Treasuries dropped sharply as investors sought opportunities they perceived to be safe, reported Lawrence C. Strauss of Barron\u2019s. The yield on the two-year U.S. Treasury dropped from 4.6 percent to 3.8 percent, and the yield on the 30-year U.S. Treasury fell from 3.7 percent to 3.6 percent.<\/p>\n\n\n\n
While Treasuries are considered to be quite safe, one lesson from recent events is that there are circumstances in which even safe-haven investments may produce a loss. For example, in general, bonds expose investors to interest-rate risk. When interest rates rise, the value of bonds falls. If a bondholder must sell a bond before it matures, the seller may realize a loss.<\/p>\n\n\n\n
In stock markets, bearish sentiment was high. Almost half (48.4 percent) of participants in the AAII Survey of Investor Sentiment were bearish. That\u2019s well above the historic average of 31.0 percent.
In contrast, just about one-fifth (19.2 percent) were bullish. That\u2019s well below the historic average, which is 37.5 percent. The Survey of Investor Sentiment is widely considered to be a contrarian indicator and, in general, the market moves in opposition to contrarian indicators.<\/p>\n\n\n\n
Despite investor pessimism, the Standard & Poor\u2019s 500 Index and Nasdaq Composite finished the week higher, while the Dow Jones Industrial Average finished slightly lower.<\/p>\n\n\n\n
Markets are likely to remain volatile this week. If you find yourself wondering how short-term market fluctuations may affect your long-term financial goals, get in touch. We\u2019re happy to talk about any concerns.<\/p>\n\n\n\n