The S&P 500 Index of U.S. large-cap stocks fell to its lowest level in 2022. Despite strong earnings from bellwethers such as Apple, Microsoft, and Meta Platforms, Amazon's earnings disappointed, posting its first quarterly loss since 2015 and sending its shares down 14%.
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).
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.
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.
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.
Market volatility sits at a two-year high as Russia invaded Ukraine. On the news of the invasion, the NASDAQ Composite swung by 6.8%, the largest intraday swing since the day WHO declared the start of the pandemic in March of 2020.
