Russia and rate worries pushed stocks lower last week, suffering their second consecutive week of declines. Worries about an imminent Russian invasion of Ukraine and high inflation weighed on market sentiment.
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We are in the middle of earnings season, with 112 names in the S&P 500 reporting last week. Amid all the earnings news, the market recorded its second consecutive week of gains.
Large Cap indices moved into correction territory last week, down more than 10% from recent highs, but rallied back by the weekend. The Russell 2000 Index of small-cap stocks tested bear market territory, down nearly 20% off its November peak, but also rebounded.
The U.S. stock market suffered its worst week of performance since March 16, 2020's pandemic sell-off. Rising rate fears and growth concerns hit markets hard, with tech shares taking much of the brunt causing the NASDAQ Composite to plunge 7.5%.
As earnings season gets into high gear, inflation and rate worries continue to weigh on investors. The major US indices recorded their second consecutive weekly loss and the tech-laden NASDAQ posted its third. Financial shares were also under pressure as JP Morgan and Citigroup reported lower fourth-quarter profits. Energy shares rallied on higher oil prices, which have revisited late-October highs.
With bond yields on the rise, stocks staged a formidable retreat in their first week of trading for the year. Higher rates particularly took a toll on growth and technology stocks, which suffered their biggest weekly decline in nearly a year, as the yield on the 10-year Treasury touched 1.8%.
Fed tightening and omicron spike fears made for a volatile week last week. With expectations for higher interest rates, growth and tech stocks fared the worst. The NASDAQ Composite ended 7% below its recent peak, but still above the 10% correction territory threshold.
Investor fears surrounding the omicron variant of COVID subsided last week as early indications suggest it is contagious but mild and that current booster shots were likely 70-75% effective in preventing illness. The S&P 500 saw its best weekly gain since February, with tech stocks driving much of the market's rally.
Markets were volatile last week thanks to concerns about faster Fed tapering and fears that the emergence of the new COVID strain Omicron could dampen global growth and exacerbate supply chain issues.
