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Weekly Market Update 02/05/2022

by Justin J. Long CFP®, on Feb 05, 2022

Las Vegas is the place to be this week if you are a sports fan. Things kicked off with the NHL All Star games, and Vegas Born's very own Mark Stone, Jonathan Marchessault, and Alex Pietrangelo took the ice representing the Pacific Division.

While the city prepared to host NHL All-Star Weekend, the Vegas Golden Knights celebrated youth hockey with several events for boys and girls across the Valley during the week. On Thursday night, the Vegas Junior Golden Knights stormed City National Arena. Dozens of girls skated in a skills competition and even got a video greeting from members of the U.S. Women’s Olympic Team.

The weekend of sports all-stars continues Sunday with the NFL Pro Bowl at Allegiant Stadium.

Speaking of All-Stars, Diazo had quite the lineup on Tuesday as we hosted the Quarterly Market Update.  We appreciate all who attended the webinar live.  For those who were unable to make it, or for those who would like to re-watch the broadcast, the webinar can be viewed here.

And now on to the recap of this week:

HubSpot Video

Watch this week's update 

Week in Review: Market overcomes rate-hike expectations

Each of the major indices rose more than 1.0% this week, as the market continued to stabilize from an oversold condition despite increased rate-hike expectations. The Nasdaq Composite led the advance with a 2.4% gain, followed by the S&P 500 (+1.6%), Russell 2000 (+1.7%), and Dow Jones Industrial Average (+1.1%). 

Eight of the 11 S&P 500 sectors closed in positive territory, paced by the energy (+4.9%), consumer discretionary (+3.9%), and financials (+3.5%) sectors with impressive gains. The materials (-0.2%), real estate (-0.2%), and communication services (-0.3%) sectors ended the week with modest losses. 

The market had plenty going for it this week, including month-end rebalancing activity, first-of-the-month inflows, an improved technical posture, a fear of missing out on further rebound gains, and better than expected (and feared) earnings reports. The S&P 500 reclaimed its 200-day moving average (4444). 

Alphabet (GOOG) and Amazon.com (AMZN) saw big gains following their earnings reports but not as big as Snap's (SNAP), which provided investors a huge sigh of relief after Meta Platforms (FB) plunged over 25% following its disappointing earnings news. SNAP popped off with a 60% gain after falling 24% prior to its report. 

Friday's release of the latest monthly employment report injected a dose of good news into the economic front.  In January, 467,000 jobs were added, far exceeding expectations.  This was particularly encouraging, given the headwinds posed by omicron, and suggests that the underpinnings of the labor market remain healthy enough to weather the disruption from the latest variant and wave of workplace absenteeism. We suspect lingering effects will show up in coming employment readings, but with January likely bearing the brunt of the disruption, this is a broadly encouraging sign. 

The expectations for the Fed to raise the fed funds rate by 50 basis points in March increased noticeably after the January employment report displayed this surprisingly strong jobs growth and also higher-than-expected wage gains. According to the CME FedWatch Tool, the probability of that happening increased to 36.6% on Friday, versus 14.3% one week ago. 

On a related note, both the ECB and the Bank of England acknowledged the inflation risks in the economy. The Bank of England responded accordingly with a 25-basis-point rate hike for the second meeting in a row, and the ECB said it couldn't rule out a rate hike this year after previously indicating that was an unlikely possibility. 

For good measure, the Prices component of the January ISM Manufacturing Index increased to 76.1% from 68.2%, and WTI crude futures topped $92 per barrel ($92.30, +2.08, +2.3%) at week's end. 

Treasury yields pushed higher amid the inflation pressures and hawkish Fed expectations. The 2-yr yield rose 15 basis points to 1.32%, and the 10-yr yield rose 15 basis points to 1.93%. The U.S. Dollar Index fell 1.9% to 95.44 amid a stronger euro. 

Key economic data being released this week include consumer credit and inflation, both should give us increased insight into the economy in January.

DJIA 34725.47 35089.74 364.27 1.0 -3.4
Nasdaq 13770.57 14098.01 327.44 2.4 -9.9
S&P 500 4431.85 4500.53 68.68 1.5 -5.6
Russell 2000 1968.51 2002.36 33.85 1.7 -10.8


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®
Founder/Lead Advisor
Diazo Wealth Group
702-745-1800 Direct
702-278-6560 Cell

Upcoming Economic Calendar

Real Time Economic Calendar provided by Investing.com.

Source: 1. FactSet

Source: Week in perspective provided by Briefing.com. Briefing.com offers live market analysis on their web site www.Briefing.com.

Source: https://www.schwab.com/resource-center/insights/content/schwab-market-update 

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

Topics:FiduciaryFinancial PlanningMarkets

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