The major U.S. market indices ended lower last week, with Value outpacing Growth and Large Caps trailing their smaller-cap peers, thanks in part to Netflix's 35% implosion on global subscription losses. More importantly, it was revealed that everyone on the planet is using the same username and password (hyperbole, but it's a problem nonetheless).
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Most of the big players in the ETF industry were in Miami last week for Exchange: The ETF Experience Conference at the Fontainebleau. There were some great sessions and it was nice to see colleagues in person again. Not too many masks, but lots of hand sanitizer for the vaxed or negative testing crowd. I will recap some of the highlights below, but first here's a brief recap of the market week.
As investors brace for rate hikes, market action was choppy last week. Defensive sectors such as consumer staples and healthcare recorded solid gains, while technology, communication services, and consumer discretionary sold off. One tech outlier was the shares of Twitter which soared 27% last Monday on news that Elon Musk acquired a 9.2% stake in the company.
During the first quarter, U.S. stock markets recorded their first quarterly loss in two years and the U.S. bond market suffered its worst quarter in 40 years. The start of the Federal Reserve’s interest rate hiking cycle, persistently high inflation, and the Russian invasion of Ukraine, combined, creating a volatile quarter for both stocks and bonds.
The S&P 500 closed out its best month since December, but still posted its first negative quarter in two years, down 4.6% on a total return basis. That was still better than the bond market, which experienced its worst quarter in 40 years.
Bond yields jumped last week, as the Fed's tone appeared to turn more hawkish. On Monday, Fed Chair Jerome Powell repeated in a speech to the National Association for Business Economics that the central bank may raise rates more than 25 basis points (0.25%) at future meetings if policymakers deem it necessary to curb inflation.
Years ago, when we started talking about Digital Assets and Blockchain, one of the early criticisms among sceptics was the lack of “real-life”, practical use-cases. Well, one is playing out in “real time” with regard to the Russian invasion of Ukraine, leading some to describe it as the “first crypto war”.
Last week's market rally was historic given it was only the 5th time in market history that the S&P 500 gained at least 1% for 4 consecutive days. According to LPL's Ryan Detrick, the recent market action is extremely bullish, with the market being up more the 20% each year it occurred, generating an average gain of 28%.
Another week of extreme volatility associated with the situation in Ukraine sent the NASDAQ into correction territory, down 22% below its peak. The S&P 500 is off 14% since its highs. Many consumer staples stocks, like Coca-Cola, Pepsi, and food and consumer products, traded down on the announcement they were suspending business to Russia.
Stocks ended the week lower during a volatile week when investors continued to weigh developments related to the situation in Ukraine. The energy sector was the best performer, as international oil prices approached $120 per barrel.