01|25|2022

The Bears | January 21, 2022

AUTHOR: Jason J. Roque, MS, CFP®, APMA®, AWMA®
TITLE:       Investment Adviser Rep – CCO
TAGS:   S&P500, NASDAQ, Inflation, Consumer

The bears are asserting themselves right now. Will the bulls be back this week to fend off the Bearish trend?

Monday

Happy Martin Luther King Jr. Day!

Tuesday

Markets opened the week as they had the prior week. Volatility was up and markets were down early! One concern was the potential for flight disruptions as wireless carrier giants roll out 5G near airports. The use of 5G has companies utilizing airwaves that had previously not been used. The concern being that they could provide potential interference for airlines.

Wednesday

The S&P 500 opened higher on Wednesday, but quickly faded into the red. At the open, equities were higher and fixed income was higher as well. Typically buying in fixed income is viewed as a defensive move. The equity sell-off that occurred into the close did not get accompanied by a sell-off in fixed income. Those continued to gain. This is a signal of perhaps a more bearish trend to come. The S&P 500 ended up losing 0.97% on the day. The NASDAQ, which lost 1.15% on the day, entered technical correction territory (being down more than 10% from it’s high). The S&P 500 is off 5.5% from it’s high on January 3rd.

Thursday

Markets opening strongly in the green. The S&P 500 was up more than 1.5% early on. Markets began to fade around 12:30PM EST and never looked back. The S&P 500 ended up falling 1.19% and the NASDAQ led the way, down 1.39%. Most of the losses came in the final hour of trading.

Friday

Movement within markets continued into the red on Friday, simply reinforcing the action from the entire week. Interest rates at the 10-year level fell. This is a more traditional reaction to an equity sell-off. The S&P 500 ended up dropping another 1.89%. The Nasdaq continued to lead the way, being down 2.72%.

Conclusion

The S&P 500 lost 5.68% last week and is down 8.31% from its January 3rd closing high. The Nasdaq 100, which has more growth focused positions, lost 7.49% last week and 12.88% from its November high. The controlled nature of this sell-off tends to reflect a more measured corrective environment. With the Federal Reserve Board meeting next week, all eyes will be on interest rates!

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