Stocks Slide to Year-to-Date Lows as Oil Surge Rekindles Inflation Fears

Stocks ended last week sharply lower, impacted by renewed inflation and geopolitical events. Each of the major benchmark indexes ended the week lower, while crude oil prices surged to the highest levels since August 2022, as intensifying tensions in the Middle East disrupted global energy trade. Higher energy costs triggered a move from risk, with Industrials, Consumer Staples and Materials being hit the hardest. Surging oil prices also spiked inflation fears, while the labor sector continued to lag. With last week’s decline, the Dow, the S&P 500 and the NASDAQ each retreated to year-to-date lows.

Job Market Weakens as February Employment Declines and Unemployment Rises

The jobs sector continued to lag in February. According to the latest report from the Bureau of Labor Statistics, employment edged down by 92,000 last month, while the unemployment rate ticked up 0.1 percentage point to 4.4%. The number of unemployed people, at 7.6 million, rose by 203,000. The number of long-term unemployed (those jobless for 27 weeks or more) changed little at 1.9 million in February but was up from 1.5 million a year earlier. The long-term unemployed accounted for 25.3% of all unemployed people in February. Both the labor force participation rate and the employment-population ratio dipped 0.1 percentage point to 62.0% and 59.3%, respectively. The change in employment for December was revised down by 65,000, from +48,000 to -17,000, and the change for January was revised down by 4,000, from +130,000 to +126,000. With these revisions, employment in December and January combined was 69,000 lower than previously reported.

Eye on the Week Ahead

There are plenty of important economic reports out this week. The second estimate of fourth-quarter GDP is out, while the latest inflation data is available with the release of the Consumer Price Index and the Personal Consumption Expenditures Price Index.