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Stocks and Bonds Down Sharply to Start 2022 Thumbnail

Stocks and Bonds Down Sharply to Start 2022

The stock markets got whacked last week, with the Dow (-0.2%), NASDAQ (-4.5%), and S&P 500 (-1.8%) exhibiting the worst opening week since 2016.  Bonds were also down sharply, as taxable bonds were down about 1.5% and tax-free municipal bonds were down around 0.5% - 0.8%.  Those are large weekly losses for bonds as well.

 

Both the stock and bond markets reacted adversely to the same economic headlines, and that is concerns that the Fed will be raising interest rates in 2022 at a quicker pace than previously expected, in an attempt to combat inflation.  Higher PE stocks, such as growth and technology companies, are more susceptible to interest rate movements, which explains the sharper drop in the NASDAQ than the Dow.  Please note that I completed writing a 2022 economic outlook that is currently being reviewed, but should be published in the coming days.


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.