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Inflation Fears Cause Stocks to Fall; Bonds Mixed Thumbnail

Inflation Fears Cause Stocks to Fall; Bonds Mixed

Amidst a volatile week, the Dow (-0.6%), NASDAQ (-0.7%) and S&P 500 (-0.3%) each dropped, snapping a 5-week streak of gains.  Taxable bonds also fared similarly, as they dropped about 0.6% - 0.9%.  Conversely, tax-free municipal bonds bucked the trend by gaining about 0.2% - 0.3% for the week.


Corporate earnings season is nearly over, as 92% of S&P 500 companies have reported their earnings.  It has been a very strong earnings season, as the average gain was 39.1% compared to last year, which is the 3rd highest since 2010.  However, economists are predicting that earnings growth in 2022 will be in single digit percentages.  Consumer confidence also hit a 10-year low, as consumers exhibit concerns over inflation.  Last week, the Consumer Price Index (a key measure of inflation) jumped 0.9% over the prior month, and 6.2% over last year.  That marks the 5th straight month exceeding 5%, and the highest annual increase in over 30 years.  Thus, these inflation numbers spooked BOTH the stock and bond markets last week, causing both of them to fall.

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