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04/03/22 Briefing

The major indices are back in retreat mode as the S&P 500 has run into resistance again at the 4400 level.

Today's market has a mostly defensive slant, evidenced by the outperformance of the utilities (+1.8%), real estate (+1.0%), health care (+0.6%), and consumer staples (+0.8%) sectors. Strikingly, the mega-cap stocks aren't standing out as a safe-haven outlet in the equity market despite being high up on the quality ladder in most cases.

Instead, the mega-caps are seeing continued selling interest as investors work to reduce concentration risk in a market where valuations are being questioned across the board.

The Vanguard Mega-Cap Growth ETF (MGK) is down 1.5%, whereas the Invesco S&P 500 Equal Weight ETF (RSP) is down just 0.2%.

Tomorrow features the February Employment Situation Report. With inflation concerns still elevated, the avg. hourly earnings number will be a market-moving focal point. The Briefing.comconsensus estimate calls for a 0.5% month-over-month increase. That report, and the latest developments from the Russia-Ukraine conflict, will be the primary trading catalysts for the capital markets.

The Treasury market has had a relatively subdued day today after a remarkably volatile stretch. The 10-yr note yield is unchanged at 1.85% and the 2-yr note yield is up two basis points to 1.54%, leaving the 10s2s spread at 31 basis points versus 78 basis points at the start of the year. This flattening curve has been held out as a signpost of growing concerns about the economic growth outlook that have contributed to the multiple compression in the stock market as earnings estimates have been called into question.

The Dow Jones Industrial Average is down 0.2%; the S&P 500 is down 0.6%; the Russell 2000 and Nasdaq COmposite are down 1.7%.

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