Despite a host of political headlines as the presidential election comes increasingly into focus along with several important economic releases, the markets posted mixed returns last week. Large caps gave up a little ground in late trading on Friday. For the week, the S&P 500 was down 0.23%, the Dow Jones Industrial Average was down 0.85%, and the NASDAQ lost 1.15%. The S&P Mid-cap Index gained 1.48% and the Russell 2000 small-cap index flat for the week. The Bloomberg Barclays US Aggregate was up 0.81%.

On Friday, the BLS (Bureau of Labor Statistics) reported the U.S. economy added 275,000 jobs in February. That was higher than the expected 198,000 by economists, but the positive surprise was offset by negative revisions to the prior two months totaling 167,000 less job gains than initially reported. While the unemployment rate moved up to 3.9% (a two-year high), the job market seems to remain on firm footing. Average hourly earnings were up 0.1% month-over-month and up 4.3% year-over-year. Both time periods came in below analyst expectations of 0.3% and 4.5%, respectively. The JOLTs (Jobs Openings Labor Turnover) report showed the quits rate came in at a cycle-low of 2.1%. The lower quits rate, slowing wage growth, and rising unemployment rate all point to a gradual loosening of tight labor market conditions.

The February release of the ISM (Institute of Supply Management) Services index continued to be in expansion territory at 52.6, even though it came in just short of the consensus of 52.9. Some positives in that report were new orders accelerated and the prices paid index went down 5.4 points month-over-month to 58.6. The business activity index was up 1.4 points to 57.2, and new orders were up 1.1 points to 56.1. All signaling sentiment is healthy as respondents remain positive on business conditions. The cooling input costs noted in the report, alongside the loosening labor market data, help give the Fed comfort that the fight against inflation is on the right course toward a soft landing.

Speaking of the Federal Reserve, Chairman Powell at the House Financial Services Committee Wednesday, said he believes that the Fed’s policy rate is likely at its peak for this tightening cycle, and if the economy evolves as expected, it will likely be appropriate to dial back policy restraint at some point this year. Though he gave no indication of when this year.

This week continues with much watched economic news. Today and tomorrow bring us the February CPI (Consumer Price Index) and PPI (Producer Price Index) reports showing if inflation is remaining steady or decreasing to give the Fed more information to solidify their comfort level to begin reducing interest rates. While an increase won’t be devastating, it may push a reduction in Fed Funds rate off just a little longer.