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.
The views stated in this letter are not necessarily the opinion of Cetera Advisor Networks LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.