Weekly Market Update 02/27/2022
by Justin J. Long CFP®, on Feb 27, 2022
If this were a normal week, the introduction to this weekly email would speak to the local or personal happenings in Las Vegas or for Diazo. To be frank, I think all of our eyes have been on the Ukraine and Russia for the last four days (and probably will be for the week ahead).
Diazo released a blog early this week, addressing the uncertainty we are facing in the market on several fronts. I want to lean in on what is on everyone's minds, and circle back to the underlying message of that blog, because I feel it is crucial here.
What can we do when we're facing major events we can't control? Take a deep breath, be grateful for all the good in our lives, and focus on our strategy. (And email me with questions or concerns.) Let's hope for peace and clarity in the weeks to come. I’m keeping a close watch and will reach out as needed.
And now on to the recap of this week:
Week in Review: Russian invasion drives volatile action
The stock market made a huge comeback this week, initially selling off on a worsening Russia-Ukraine situation, then rallying on optimism that the situation won't have a material impact on the economy.
The S&P 500 ended the week with a 0.8% gain after being down as much as 5.4% from last Friday's close. The Nasdaq Composite (+1.1%) and Russell 2000 (+1.6%) each gained over 1.0% after being down as much 7.1% and 5.7%, respectively. The Dow Jones Industrial Average lost 0.1% after being down 5.3% intraweek.
Russia invaded Ukraine after receiving a host of sanctions from the U.S., UK, and EU that clearly weren't inhibitory to Russia's plans. Notably, after the invasion, the U.S. did not sanction Russia's oil and gas exports, nor did it block Russia's access to the SWIFT financial system immediately.
By week's end, it seemed that Russia was close to completing its "special military operation" after entering Kyiv and saying it's ready to send delegation to Minsk to hold diplomatic talks with Ukraine. Russia's RTS Index might have tanked 33% amid all the sanctions, but the U.S. market acknowledged that inflation might not directly worsen as initially feared.
Eight of the 11 S&P 500 sectors closed higher, paced by the defensive-oriented health care (+2.7%), real estate (+2.7%), and utilities (+2.0%) sectors. The consumer discretionary (-2.2%), consumer staples (-0.3%), and financials (-0.3%) sectors closed lower.
The retracement in commodity prices corroborated the inflation hopes. Notably, WTI crude futures settled higher by just 0.4% to $91.59/bbl after briefly topping $100.00/bbl after the Russian invasion.
That's not to say that the market is in the clear regarding inflation. The PCE Price Index, which is the Fed's preferred inflation gauge, rose 0.6% m/m in January (Briefing.com consensus 0.5%), leaving it up 6.1% on a year-over-year basis.
The 2-yr yield rose 12 basis points to 1.59% on continued expectations for the Fed to hike rates at least six times in the near term. The 10-yr yield rose six basis points to 1.99%. The U.S. Dollar Index rose 0.5% to 96.54.
|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