Weekly Market Update 01/30/2022
by Justin J. Long CFP®, on Jan 30, 2022
Are you ready for some football? The Longs are! As a house full of 49ers fans, we are cooking up some chicken wings and snacks in anticipation for the NFL Conference Championships today.
In other news, this week Diazo has the Quarterly Market Update scheduled for Tuesday at 1PM PST. You can click here to sign up to attend or if you are not able to make it, we will send you the recording.
And now on to the recap of this week:
Watch this week's update
Week in Review: Blue-chips outperform in volatile week
The Dow Jones Industrial Average gained 1.3 this week, as investors sought blue-chip stocks amid the heightened volatility in the market. The S&P 500 rose 0.8%, thanks to a strong finish on Friday, while the Nasdaq Composite (unch) closed flat and the Russell 2000 fell 1.0%.
Six of the 11 S&P 500 sectors closed lower while five sectors closed higher. The industrials (-1.5%), utilities (-1.4%), and consumer discretionary (-1.0%) sectors fell at least 1.0%, while the energy sector (+5.0%) stood out with a 5% gain as oil prices flirted with $89 per barrel during the week.
The S&P 500 bounced within a 231-point range -- hitting technical resistance at its 200-day moving average (4435) several times -- this week. The primary concern was the Fed being more aggressive in tightening policy to the point where it slows down economic growth.
The fed funds futures market began pricing in the probability for five rate hikes this year, starting in March, following the FOMC meeting on Wednesday. Fed Chair Powell explained that policy needs to adapt to high inflation risks and that extremely accommodative policy no longer seems appropriate. The Advance Q4 GDP report and the PCE Price Index both supported the Fed Chair's case.
Accordingly, 2-yr yield rose 18 basis points to 1.17%, and the U.S. Dollar Index rose 1.7% to 97.24. The 10-yr yield increased just three basis points to 1.78%.
Investors weren't ready to give up on the market, though, especially when a lot of companies continued to beat earnings expectations. The big discounts in stock prices helped, too. Investors were selective and preferred quality over riskier stocks like Tesla (TSLA), which fell 10% following its better-than-expected earnings report.
Dow components Apple (AAPL), Microsoft (MSFT), Visa (V), Johnson & Johnson (JNJ), American Express (AXP), IBM (IBM), 3M (MMM), and Dow Inc. (DOW) posted decent gains following their reports. Caterpillar (CAT), which beat EPS estimates, was hit by commentary about higher costs and lower margins.
Despite the comeback effort late in the week, the small-cap Russell 2000 still closed lower by 20% from its all-time high.
|INDEX||STARTED WEEK||ENDED WEEK||CHANGE||% CHANGE||YTD %|
As always, it is my pleasure to bring you this weekly update. If this or anything else is causing you pause or you would like further details, please feel free to reach out to me and we can schedule some time to chat.
Justin J. Long CFP®
Diazo Wealth Group
Upcoming Economic Calendar
Source: 1. FactSet
Source: Week in perspective provided by Briefing.com. Briefing.com offers live market analysis on their web site www.Briefing.com.
The data provided is for informational purposes only and is not an endorsement of any security, mutual fund, sector, or index. The information contained here is not guaranteed as to accuracy or completeness. All economic and performance information is historical and does not guarantee future results.
The Dow Jones Industrial Average is a price-weighted index comprising 30 widely traded blue chip U.S. common stocks. The NASDAQ Composite Index is a market-value-weighted index of all common stocks listed on the NASDAQ stock exchange. The S&P 500 Index tracks the performance of 500 of the largest publicly traded companies in the United States. The MSCI Europe, Australasia, and Far East (EAFE) Index tracks the performance of publicly traded large- and mid-cap stocks of companies in those regions. The Cboe Volatility Index (VIX) shows the market’s expectation of 30-day volatility and is constructed using the implied volatilities of a wide range of S&P 500 Index options. Weekly and year-to-date figures for the VIX show percentage changes, not investment returns. The Russell 2000 Index tracks the performance of approximately 2,000 publicly traded small-cap companies in the United States. It is not possible to invest directly in an index.
The Treasury yield curve is derived from available U.S. Treasury securities trading in the market and is provided directly by the U.S. Federal Reserve. The spread measures the difference in yield between two government securities. A normal (positive) yield curve occurs when longer-term rates are higher than shorter-term rates. The opposite holds true for an inverted yield curve. Year-to-date changes in U.S. Treasury bond yields are shown in basis points (bps). One hundred basis points equals one percent.
Oil prices are represented by West Texas Intermediate (WTI) crude oil.
The G20 countries comprise a mix of the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85% of global gross domestic product, and over 75% of global trade.
Innovative Adviser Solutions, LLC, a registered investment adviser, dba Diazo Wealth