Weekly Recap | January 18, 2022

January 10-14, 2022 Recap

Nasdaq Stocks Lead 2022 Pullback

Equities Retreat Second Week
All three major U.S. equity indices extended early 2022 losses as investors continue to fret over when and how fast the Federal Reserve will raise interest rates to tame inflation. The S&P 500 and Dow Industrials both fell fractionally a second week, while the Nasdaq Composite was down a third straight week.  Investors’ angst was also stirred by a pullback in retail sales and less-than-ideal fourth quarter earnings in mega cap banks.

For the Week…
The S&P 500 slipped 0.29%, the Dow Industrials lost 0.88% while the tech-heavy Nasdaq Composite fell 0.28%. The Nasdaq is now 7.2% below its 2021 all-time high set on November 19. In contrast, foreign stocks outperformed last week, with emerging markets jumping nearly 2.6%.

Retail Sales
U.S. retail sales fell the most in 10 months in December, indicating the fastest pace of inflation in nearly four decades is taking a toll on consumer demand. Retail sales fell 1.9% last month after a revised 0.2% November gain. Overall, retail sales increased 16.9% in 2021, but the pace of growth slowed in the final months. Sales at bars and restaurants declined for only the second time in 2021.

Energy Tops the Charts
Nine of the 11 major sectors ended negative last week, with Real Estate (-1.97%), Consumer Discretionary (-1.47%) and Utilities
(-1.40%) falling the most. Energy (+5.26%) outperformed a second week, extending the 10.6% prior week gain. Communication Services (+0.52%) posted a small weekly gain, while Technology (-0.06%) fell the least.

Treasury Yields Edge Higher
Treasury prices retreated amid continuing selling, sending the yield on benchmark 10-year notes up a fourth consecutive week, climbing the most over that period since mid-March 2021. The yield on benchmark 10-year Treasurys ended Friday at 1.77%. The U.S. Dollar Index fell by 0.58% last week. U.S. WTI crude oil gained over 6% last week amid growing supply constraints, ending Friday at $83.82/barrel.

The Latest from @CeteraIM

Recovery Pace Improves

Growth/Value Correlation Plummets

Producer Prices Could Be Peaking

Economic Calendar

Monday, January 17
Martin Luther King, Jr. Day, All Markets Closed.

Tuesday, January 18
Empire State Manufacturing, Housing Market Index.

Wednesday, January 19
Mortgage Activity, Housing Starts, Building Permits.

Thursday, January 20
Jobless Claims, Philly Fed Manufacturing Outlook, Existing Home Sales.

Friday, January 21
Leading Economic Indicators.

The pace of inflation growth accelerated through the close of 2021. The consumer price index (CPI) rose 0.5% in December and 7.0% year-over-year (highest since June 1982). Core CPI, which excludes food and energy, increased 5.5% year-over-year, reaching a 30-year high. For context, core CPI averaged 1.9% in the 10 years prior to 2021.

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

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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.}