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Weekly Recap | January 24, 2022

Weekly Recap | January 24, 2022

| January 25, 2022
Weekly Recap

January 17-21, 2022 Recap

Worst Nasdaq Annual Start Since 2008

Equities Plunge Most Since 2020
The S&P 500 suffered its worst weekly loss since the COVID-19 pandemic selloff in March 2020. The benchmark index capped its third-straight weekly loss and ended Friday below its 200-day moving average for the first time since June 2020.  With prospects rising for a faster-than-expected Federal Reserve rate liftoff, the sell-off on the tech-heavy Nasdaq Composite was even worse, skidding nearly 7.6% during the MLK, Jr. holiday-shortened four-day trading week.

For the Week…
The S&P 500 retreated 5.67%, and the Dow Industrials lost nearly 4.6% for its worst week since October 2020. The Nasdaq Composite also posted its worst week since 2020 (-7.55%), capping a fourth weekly loss and its worst start to a year since 2008 (-11.99%). The Nasdaq moved deeper into correction territory, down 14.25% from its November 19 record close.

Mortgage Activity Climbs
Mortgage applications activity rose 2.3% last week, capping its first set of back-to-back weekly gains since mid-September. The increase follows a 1.4% gain the week prior as home buyers were increasingly compelled into action amid the backdrop of rising rates. The average 30-year fixed home loan rate rose to 3.64% from 3.52% the previous week. Purchase applications surged 7.9% while refinance activity fell 3.1%.

Utilities Decline Least
All 11 major sectors ended in negative territory last week, with Consumer Discretionary (-8.48%), Communication Services (-7.05%) and Technology (-6.94%) falling the most. Defensive-oriented sectors including Utilities (-0.79%), Consumer Staples (-1.42%) and Real Estate (-2.85%) fell the least. Consumer Discretionary (-12.16%) and Technology (-11.34%) are down the most on a year-to-date (YTD) basis.

Treasury Yields Ease
Benchmark 10-year Treasury yields reached a 1.9% intra-day high on Wednesday as investors focused on a faster central bank timeline for raising interest rates as soon as March. Yields, however, ended broadly lower on Friday amid rising concerns over Russia’s military buildup near Ukraine’s northern and eastern border areas. The yield on 10-year Treasurys ended Friday at 1.752%, down 0.02% for the week. The U.S. Dollar Index strengthened 0.50% last week, while U.S. WTI crude oil gained over 1.5%, ending Friday at $85.14/barrel.

The Latest from @CeteraIM

Recovery Indicators Slow

Jobless Claims Jump

Stock Returns During Presidential Cycles

Economic Calendar

Monday, January 24
Chicago Fed National Activity, IHS Markit Mfg. and Services PMIs.

Tuesday, January 25
Housing Prices, Consumer Confidence.

Wednesday, January 26
Mortgage Activity, Advance Goods Trade Balance, Retail and Wholesale Inventories, New Home Sales, FOMC Rate & Policy Decisions.

Thursday, January 27
Jobless Claims, 4Q GDP, Durable Goods Orders, Pending Home Sales.

Friday, January 28
Personal Incomes & Spending, Labor Costs, PCE Prices, Consumer Sentiment.

Treasury yields are marching higher across the yield curve in anticipation of a more aggressive Fed. The 10-year Treasury yield is already up more than 30 bps (+0.30%) this year. The sharp rise in yields has increased volatility in stocks. Markets are adjusting to a new environment.

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
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About Cetera Financial Group
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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.