It was another busy, and volatile, week in the markets. The US Federal Reserve (Fed) moved forward with the much anticipated 50-bps interest rate hike on Wednesday and equity markets immediately rallied on the news.
August 8, 2022
April was an abysmal month for most risk assets, with the S&P 500 index (large US companies) declining nearly 9 percent bringing year-to-date losses for the index to almost 13 percent.
Equity markets are once again in correction territory (defined a decline of 10% or more) with some parts of the market, such as technology stocks, officially in a bear market (a decline of 20% or more).
Both equity and fixed income markets continued their downward slide last week. The war in Ukraine continues to drag on, Covid-19 lockdowns in China persist, and Federal Reserve President Powell indicated that a 50-bps interest rate increase is “on the table” at the next meeting.
Last week the equity markets retreated, in general, during the holiday-shortened week. Inflation, the conflict in Ukraine, and the resurgence of Covid-19 all remain issues that are weighing on investors.
After rallying in March, equity markets retreated last week. Investors expressed concern over the Federal Reserve (Fed) meeting minutes released on Wednesday, which communicated plans to reduce their balance sheet (alongside raising interest rates throughout the year).
Since our last monthly update, it’s fair to state that the Russia / Ukraine war and resulting energy and commodity price increases have clouded the outlook for US and global economic growth.
Risk assets, in general, advanced last week, building upon a big bounce upward the week prior. The S&P 500, a proxy for US large-cap stocks, gained 1.8 percent for the week and the MSCI ACWI, a proxy for global large-cap stocks, advanced 1.2 percent.
In a week full of headlines, investors found more positive news than negative and equity markets responded by rallying across the board last week.
The conflict in Ukraine has entered its third week and the destruction it has caused to the country and citizens has only intensified. The United Nations now estimates that 2.7 million people have fled the country since the invasion.