- In what was another choppy week, global equity markets were mixed from a return perspective. We saw global markets (represented by the MSCI All Country World Index) down -1.1% and domestic stocks (represented by the S&P 500 Index) up 0.8%. Despite outperforming domestic markets so far this year, both developed international (represented by the MSCI EAFE Index) and emerging markets (represented by the MSCI Emerging Markets Index) were down over 3% for the week.
- To highlight the “choppiness” that is taking place in markets right now, I would point you to market movements from last Monday (1/24). The Dow Jones Industrial Average, which is a 30-stock index, swung 1,214 points within the day. After starting the day down over 1,000 points (which equated to over 3%), the index finished in positive territory up 0.3%. That was the first time in the index’s history that it finished positive after being down over 1,000 points during a day.
- The Federal Reserve held their first 2-day meeting of the year last week. As expected, they pointed to the likelihood that they’ll raise short-term interest rates at their next meeting in March.
- We received some GDP news last week. For Q4 2021, it was reported that the U.S. grew at an annualized 6.9% rate for the quarter. The U.S. Bureau of Economic Analysis announced that GDP in 2021 was 5.7% in inflation-adjusted terms. Lastly, The International Monetary Fund adjusted their global GDP expectations for 2022 down to 4.4%. The drop was mostly due to a reduction in U.S. and China expectations caused by the pandemic, inflation, and supply chains.
- Q4 2021 corporate earnings expectations were 21.4% coming into the year. After adjustment for recently released earnings, the expectation is now about 24% according to FactSet.
- I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.
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