Dow slid back 34, decliners over advancers 3-1 & NAZ dropped 119.  The MLP index was off 1+ to the 228s & the REIT index pulled back 2+ to the 407s.  Junk bond funds retreated & Treasuries continued to be sold.  Oil finished fractionally higher to the 74s & gold went up 6 to 1882 (more on both below).

AMJ (Alerian MLP Index tracking fund)

"You don't have a recession when you have 500,000 jobs and the lowest unemployment rate in more than 50 years," Yellen said.  "What I see is a path in which inflation is declining significantly, and the economy is remaining strong."  Her comments came just a few days after the Labor Dept reported that the US economy unexpectedly added 517K jobs in Jan, well above the 185K forecast & the unemployment rate dropped to 3.4%, the lowest since 1969.  It marked the best month for job creation since Jul.  The surprisingly strong hiring data, which occurred despite a slew of layoffs in the tech sector, dashed investor hopes that the Federal Reserve will soon pause its aggressive rate-hike campaign as it tries to cool inflation & the labor market.  While Yellen said that tackling inflation remains Pres Biden's #1 domestic priority, she argued the recent data proved the economy is still healthy.  "What I see is a path in which inflation is declining significantly, and the economy is remaining strong," she said.   "And really that’s a path I believe is possible, and it’s what I’m hoping we will be able to achieve."

Janet Yellen: 'You don't have a recession' with unemployment at 50-year low

As markets await big earnings data this week & more commentary from Federal Reserve Chair Jerome Powell, Bank of America Vice Chairman Keith Banks detailed why it is still forecasting a recession for 2023.  As that happens, they've got to get out in front of the cost quickly," Banks said.  "What's been announced so far to us is not going to be enough," he continued, "which is why we do think you'll see additional labor weakness as we go through the year."  His comments come as Powell prepares to speak tomorrow after the central bank raised interest rates by a qtr of a point.  A number of Wall Street banks are forecasting a downturn this year, although they remain uncertain about its severity.  Banks are bracing for a recession because persistent & elevated inflation has pushed the Federal Reserve to raise interest rates at the fastest pace since the 1980s, which threatens to curtail consumer & business spending by pushing borrowing costs higher.  Policymakers already approved 7 straight rate increases in 2022, raising the federal funds rate to 4.25-4.5%, the highest level since 2007, & forecast a peak rate of about 5%.  He predicted Q4 earnings will come in lower than expected, marking the start of a slowing economy.  "We think as the economy slows, revenue is going to slow, and as a result, you're going to start to have some margin pressure and also negative operating leverage, none of which is good for earnings," Banks added.

Bank of America 'still forecasting' 2023 recession

Chinese spy balloon fallout roils Washington and Beijing

Gold futures climbed to recoup a small portion of last week's losses.  The precious metal was left licking its wounds, after sliding almost 5% from its highs last week.  Gold was already looking quite overbought & was struggling for momentum on its most recent surge.  So it was potentially primed for a correction but the US jobs data certainly finished the job.  Gold for Apr rose $2 to settle at $1879 ounce.  Prices for the most-active contract were 2.8% lower on Fri to settle at their lowest since Jan 10.

Gold futures rebound after falling to three-week low

Oil futures settled higher, logging a partial rebound from last week's steep losses.  Saudi Arabia unexpectedly lifted most prices for oil that will be shipped to Asia in Mar.  The higher prices offer a sign of stronger than anticipated Chinese oil demand & that should give the market a lot of support amid growing concerns about spare oil production capacity.  US benchmark West Texas Intermediate crude for Mar rose 72¢ (1%) to settle at $74.11 a barre.  Front-month contract prices, fell 3.3% on Fri to settle at their lowest since Jan 4, down 7.9% for the week

Oil finishes higher on signs of growing Chinese energy demand

Nothing like higher interest rates (after their recent retreat) & recession comments to shake up investors.  Nervous ones are buying safe haven gold.

Dow Jones Industrials