Market Commentary — January 24, 2022

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%.

Weakness in semiconductor shares weighed on technology stocks. Automakers and home improvement retailers dragged down the consumer discretionary sector. Declines in financial giants JPMorgan Chase and Goldman Sachs took their toll on the financial sector. And a more than 20% decline in Netflix shares following its fourth-quarter earnings report also contributed to index losses on Friday.

A lot of the market sell-off was sparked by technical signals as the NASDAQ Composite crossed below its 200-day moving average, leaving it in correction territory, down more than 10% from mid-November highs.

Fears that the Federal Reserve will need to act aggressively to curb inflation weighed heavily on sentiment. An unexpected jump in weekly jobless claims also spooked investors. Ukraine-related tensions between the U.S. and Russia were another cause for concern.

In our view, the market was due for a reality and valuation reset, but we remain bullish and think markets will resume their rally this year as inflation cools and economic growth gets back into permanent high gear. Traders are now pricing in four interest rate hikes in 2022, starting in March.

In ETF land, the SEC blocked First Trust and Skybridge’s Bitcoin ETF filings. And the hottest ETF ticker in town is Tuttle’s SARK, which is up 50% since its November launch as the short antidote for Cathie Wood’s flagship fund’s poor performance. Is long-term technological disruption dead? I laugh writing that as it is so outrageous, but for now, it has been a successful short-term trade.

Here is to a better week on Wall Street next week. I went to go see the Beyond Van Gogh exhibit on Friday which helped recharge my soul. I have this quote to share:

“For my part I know nothing with any certainty, but the sight of the stars makes me dream.” – Vincent Van Gogh

Weather permitting, take some time to gaze at the stars and think about the endless possibilities.

Jane Edmondson
CEO and Co-Founder

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