An exceptionally volatile week, marked by wide intraday price swings, whipsawed investors with stocks ending higher following a surge to the upside on the final trading day of the week.
The Dow Jones Industrial Average rose 1.34%, while the Standard & Poor’s 500 gained 0.77%. The Nasdaq Composite index ended flat (+0.01%) for the week. The MSCI EAFE index, which tracks developed overseas stock markets, declined 3.54%.1,2,3
Rising bond yields, Federal Reserve uncertainty, and escalating tensions on the Ukrainian-Russian border unsettled markets all week. The week opened with two successive days of deep early losses that were erased by furious, late-afternoon rebounds. The following two-trading sessions that started with strong gains that evaporated with late-session selling.
The most dramatic session was Monday, in which stocks ended slightly higher after hitting intraday lows that saw the NASDAQ fall 4.9%, the Dow shed 1,115 points, and the S&P 500 moved into correction territory. Technology was at the epicenter of the volatility all week as rate fears weighed on sector. Stocks rebounded strongly on Friday, managing to conclude a week on an upbeat note.4
Fed Readies Market for Rate Hikes
Last week’s meeting of the Federal Open Market Committee (FOMC) left rates unchanged, though officials signaled short-term rates would likely be raised at its next meeting in March. As expected, the Fed also approved one last round of bond purchases, bringing quantitative easing to an end by March.5
Left a bit more nebulous were details on the pace and timing of reducing the Fed’s balance sheet, a lingering worry of some investors. But Fed Chair Powell indicated that shrinking the Fed’s asset holdings may occur at a faster rate than in past periods of balance-sheet reductions, such as in 2014 and 2017.6
This Week: Key Economic Data
Tuesday: ISM (Institute for Supply Management) Manufacturing Index. JOLTS (Job Openings and Labor Turnover Survey).
Wednesday: ADP (Automated Data Processing) Employment Report.
Thursday: Factory Orders. Jobless Claims. ISM (Institute for Supply Management) Services Index.
Friday: Employment Situation.
Source: Econoday, January 28, 2022
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
This Week: Companies Reporting Earnings
Tuesday: Alphabet, Inc.(GOOGL), Advanced Micro Devices, Inc. (AMD), Exxon Mobil Corporation (XOM), PayPal Holdings, Inc. (PYPL), General Motors Company (GM), Gilead Sciences, Inc. (GILD), Starbucks Corporation (SBUX), United Parcel Service, Inc. (UPS), Stanley Black & Decker, Inc. (SWK).
Wednesday: Meta Platforms, Inc. (FB), AbbVie, Inc. (ABBV), Qualcomm, Inc. (QCOM), Thermo Fisher Scientific, Inc. (TMO), Spotify Technology (SPOT), TMobile US, Inc. (TMUS), D.R. Horton, Inc. (DHI).
Thursday: Amazon.com, Inc. (AMZN), Ford Motor Company (F), Snap, Inc. (SNAP), Eli Lilly and Company (LLY), Fortinet, Inc. (FTNT), Skyworks Solutions, Inc. (SWKS), Honeywell International, Inc. (HON), Prudential Financial, Inc. (PRU).
Friday: Air Products and Chemicals, Inc. (APD), Bristol Myers Squibb Company (BMY).
Source: Zacks, January 28, 2022
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
Natural Disasters Have Tax Implications, Too
No one likes to think of natural disasters and what might happen, but it’s always good to be prepared. A few things may happen after a disaster when it comes to taxpayer relief.
The first is that the IRS may give taxpayers more time to file and pay. If your address is in an area qualifying for IRS disaster relief, you will automatically receive more time to file your return and pay taxes.
In addition, taxpayers may qualify for a casualty loss tax deduction for people who have damaged or lost property due to a federally declared disaster.
* This information is not intended to be a substitute for specific, individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov7
Two children are born in the same hospital (and in the same hospital room) in the same year, month, day, and minute. They have the same two parents, yet they are not twins and have no brothers. How is this possible?
Last week’s riddle: A woman sailed into the Bahamas with her boat on the 28th of April. She stayed in the Bahamas for three weeks and then left in April. How is this possible? Answer: The name of her boat is April.
Footnotes and Sources
1. The Wall Street Journal, January 28, 2022
2. The Wall Street Journal, January 28, 2022
3. The Wall Street Journal, January 28, 2022
4. CNBC, January 24, 2022
5. The Wall Street Journal, January 26, 2022
6. The Wall Street Journal, January 26, 2022
7. IRS.gov, September 7, 2021
Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.
The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.
The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.
U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.
International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.
Please consult your financial professional for additional information.
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