Market Commentary

Week Ahead

Tech Stocks Dive

The equities market had the biggest decline last week in over a year as anxiety over rising interest rates and fear of slowing economic growth pushed equities lower. Technology stocks, as measured by the Nasdaq Composite index, had their biggest weekly drop since the start of the pandemic, falling into correction territory. Consumer discretionary and financials shares did not fare much better. Fears that the Federal Reserve will be more aggressive in raising rates caused investors to sell.

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It’s Earnings Season!

The focus this week turns to fourth-quarter company earnings, which in general is expected to be a stronger profit growth for economically sensitive value stocks such as energy, materials, and industrials compared to high growth technology companies. These economically sensitive sectors do better when there is inflation as their margins increase. The earnings reports will also show how companies are handling inflation. Notable names are reporting this week, such as Goldman Sachs, Travelers, and Bank of America, along with Netflix, United Airlines, and Procter & Gamble.

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2021 Sets Jobs Creation Record

On Friday, we saw a disappointing jobs report as the U.S. economy added fewer jobs in December than expected. Despite a lower number, the jobs report showed a rise in hourly earnings, and the unemployment fell to 3.9%. According to Reuters, a record 6.4 million jobs were created in 2021, the highest annual increase in employment since record-keeping started in 1939. The 10-Year U.S. Treasury yield closed below 1.8%, continuing its run from the end of the year where the yield was around 1.5%.

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Santa Claus Rally Reaches Records

The Santa Claus rally pushed equities to record highs the last week of the year. The real estate, utilities, and materials sectors outperformed with trading volume light while communication services and technology stocks lagged. An early indication of holidays sales shows that Americans were ready to spend as MasterCard reported that holiday sales rose 8.5% in December from a year earlier.

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Fed News Fuels Market Volatility

Volatility in the equity markets rose last week following the Federal Reserve’s decision to end bond purchases sooner and raised the prospects of rate hikes in 2022. Markets ended the week lower, with the technology-heavy Nasdaq underperforming by a wide margin. As expected, the Federal Reserve accelerated the pace at which it will taper its bond purchasing program but left interest rates unchanged. The outlook for higher interest rates weighed on technology shares while value stock relatively performed better.

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Investors Unfazed by INFLATION

Inflation soaring to the highest level since 1982 did not scare investors away from equities as markets closed the week higher. Consumer inflation climbed in November to almost a four-decade high. Technology shares led the rally as financials and utilities lagged for the week. Concerns over the potential impact of the Omicron variant of COVID-19 on the economic recovery eased, which helped equities higher.

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Monthly Performance Reports

Monthly Performance November 2021

October experienced a spectacular rebound from the September Effect drawdown, with the S&P 500 gaining 7.0% along with long-dated Treasuries returning 1.8%. This momentum was aided by President Biden’s massive stimulus expected from the Infrastructure Bill, above consensus corporate earnings, and the market’s expectation of a softer landing in rate tightening. Equity market gains were concentrated on growth and momentum...

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Monthly Performance October 2021

October experienced a spectacular rebound from the September Effect drawdown, with the S&P 500 gaining 7.0% along with long-dated Treasuries returning 1.8%. This momentum was aided by President Biden’s massive stimulus expected from the Infrastructure Bill, above consensus corporate earnings, and the market’s expectation of a softer landing in rate tightening. Equity market gains were concentrated on growth and momentum...

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Monthly Performance Report September 2021

To the casual eye equity markets led by the S&P 500 index-free climbs past another record gain of 2.38% in July was anything but routine. With close scrutiny as the undertow from the economic skepticism from the delta variant and emerging markets uncertainty with China’s sudden stock market crackdown temporarily splintered the global recovery. What should have been a choreographed...

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Monthly Performance Report August 2021

To the casual eye equity markets led by the S&P 500 index-free climbs past another record gain of 2.38% in July was anything but routine. With close scrutiny as the undertow from the economic skepticism from the delta variant and emerging markets uncertainty with China’s sudden stock market crackdown temporarily splintered the global recovery. What should have been a choreographed...

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Quarterly Performance Reviews

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