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Weekly Recap | February 14, 2022

Weekly Recap | February 14, 2022

| February 15, 2022
Weekly Recap

February 7-11, 2022 Recap

Stocks Reverse Lower

Equities End Two Week Rally
Stocks declined last week, snapping a pair of prior weekly gains after geopolitical and inflation risks intensified. So far, diplomatic efforts to avert a Russian invasion of Ukraine have failed to ease tensions, with the Biden administration warning that a war could erupt in Ukraine “any day now.” President Biden promised that any aggression into Ukraine would be responded to “swiftly and decisively.” On Thursday, Labor Department officials said consumer inflation reached 7.5% from a year ago, the highest since 1982.

For the Week…
The S&P 500 netted a 1.79% decline, the Dow Jones Industrial Average fell 1% and the tech-heavy Nasdaq Composite lost 2.17%. The S&P 500 and Nasdaq Composite capped the week with their biggest two-day slides since March 2020, down 3.8% and 4.8% respectively. The Russell 2000 Index that focuses on small cap stocks, outperformed last week, gaining 1.42%.

Sentiment Falls to Decade Low
The University of Michigan’s early February Consumer Sentiment index fell to 61.7 (67.0 expected, 67.2 in Jan), the lowest since October 2011. The decline reflects concerns that red-hot inflation will continue to increase in the near-term.  Moreover, poor government economic policies were cited by 51% of respondents, the highest since 2014. The sharp drop in overall sentiment also likely reflects disappointment over declining stock prices.

Energy Retains 2022 Leadership
Eight of the 11 major sector groups ended negative last week, led lower by Communication Services (-3.86%), Technology (-2.89%) and Real Estate (-2.74%). Energy (+2.09%) and Materials (+1.15%) gained the most, while Financials (+0.02%) gained the least. Energy extended YTD gains to just over 27%.

Treasury Yields Edge Higher
Despite outsized daily swings, the yield on benchmark 10-year Treasury notes eased just 2.5 basis points to end the week at 1.947%. The U.S. Dollar Index strengthened 0.63% last week after falling 1.84% the week prior. U.S. WTI crude oil futures gained 0.86% last week to end Friday at $93.10/barrel.

The Latest from @CeteraIM

Recovery Indicators Improve

Consumer Inflation Ramps Higher

A More Aggressive Fed?

Economic Calendar

Monday, February 14
No Major Releases.

Tuesday, February 15
Producer Prices, Empire State Manufacturing.

Wednesday, February 16
Mortgage Activity, Retail Sales, Import/Export Prices, Industrial Production, Housing Market Index, FOMC Meeting Minutes.

Thursday, February 17
Jobless Claims, Housing Starts/Building Permits, Philadelphia Fed Business Outlook.

Friday, February 18
Existing Home Sales, Leading Indicators.

Demand for new cars remains elevated, but auto production has been slowed by supply shortages. With supply constraints limiting auto production, new car sales were weak in the second half of 2021. Positively, auto sales surged 20% in January to a seven-month high of 15.6 million annualized. Auto production is improving, allowing for more sales.

This report is created by Cetera Investment Management LLC. For more insights and information from the team, follow @CeteraIM on Twitter.

About Cetera® Investment Management
Cetera Investment Management LLC is an SEC registered investment adviser owned by Cetera Financial Group®. Cetera Investment Management provides market perspectives, portfolio guidance, model management, and other investment advice to its affiliated broker-dealers, dually registered broker-dealers and registered investment advisers.

About Cetera Financial Group
“Cetera Financial Group” refers to the network of independent retail firms encompassing, among others, Cetera Advisors LLC, Cetera Advisor Networks LLC, Cetera Investment Services LLC (marketed as Cetera Financial Institutions or Cetera Investors), Cetera Financial Specialists LLC, and First Allied Securities, Inc. All firms are members FINRA / SIPC. Located at 655 W Broadway, 11th Floor, San Diego, CA 92101

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No independent analysis has been performed and the material should not be construed as investment advice. Investment decisions should not be based on this material since the information contained here is a singular update, and prudent investment decisions require the analysis of a much broader collection of facts and context. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The opinions expressed are as of the date published and may change without notice. Any forward-looking statements are based on assumptions, may not materialize, and are subject to revision.

All economic and performance information is historical and not indicative of future results. Investors cannot directly invest in unmanaged indices. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability, and differences in accounting standards.

Glossary

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ.

The S&P 500 is an index of 500 stocks chosen for market size, liquidity and industry grouping (among other factors) designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe.

The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad based index.

The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe and is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.

The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.

The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe and is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership.

The Bloomberg Barclays US Aggregate Bond Index, which was originally called the Lehman Aggregate Bond Index, is a broad based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government–related and corporate debt securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency) debt securities that are rated at least Baa3 by Moody’s and BBB- by S&P. Taxable municipals, including Build America bonds and a small amount of foreign bonds traded in U.S. markets are also included. Eligible bonds must have at least one year until final maturity, but in practice the index holdings have a fluctuating average life of around 8.25 years.

The Bloomberg Barclays US Corporate High Yield Index measures the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt. Payment-in-kind and bonds with predetermined step-up coupon provisions are also included. Eligible securities must have at least one year until final maturity, but in practice the index holdings has a fluctuating average life of around 6.3 years.

The Bloomberg Barclays US Municipal Bond Index covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds. Eligible securities must be rated investment grade (Baa3/BBB- or higher) by Moody’s and S&P and have at least one year until final maturity.

The MSCI EAFE Index is designed to measure the equity market performance of developed markets (Europe, Australasia, Far East) excluding the U.S. and Canada. The Index is market-capitalization weighted.

The MSCI Emerging Markets Index is designed to measure equity market performance in global emerging markets. It is a float-adjusted market capitalization index.

The Bloomberg Commodity Index is a broadly diversified index that measures 22 exchange-traded futures on physical commodities in five groups (energy, agriculture, industrial metals, precious metals, and livestock), which are weighted to account for economic significance and market liquidity. No single commodity can comprise less than 2% or more than 15% of the index; and no group can represent more than 33% of the index.

The S&P GSCI Crude Oil Index is a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market.

The S&P GSCI Gold Index, a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark tracking the COMEX gold futures market.

The U.S. Dollar Index is a weighted geometric mean that provides a value measure of the United States dollar relative to a basket of major foreign currencies. The index, often carrying a USDX or DXY moniker, started in March 1973, beginning with a value of the U.S. Dollar Index at 100.000.