In Markets "In a Nutshell"

Markets “In a Nutshell” for January 10, 2022

Investment Week at a Glance

Stocks finished lower for the week.  The Dow Jones Industrial Average fell 0.30%, the S&P 500 was down 1.90%, and the NASDAQ fell 4.50%. Foreign stocks (MSCI EAFE) were also down, falling 0.60%.  Bond prices were lower for the week, with the 10-year U.S. Treasury ending the week at 1.77%.  (Data source: Wall Street Journal)

Market Pulls Back on Higher Yields

The market had a rough start to 2022 as equities were down substantially for the first week. With yields spiking higher the past few weeks, growth companies have pulled back recently. This is shown in the NASDAQ being down nearly 5% while the Dow Jones was nearly flat for the week. As yields move higher, this puts strain on companies that are seen as having rapid growth and many of these companies are in the NASDAQ index. Although yields have spiked recently, we are still near all-time lows which is favorable for equities moving forward. If yields continue to rise at this pace expect market volatility to pick up as this seems to be the market’s main focus right now.

What is the Cause for Higher Yields?

Yields were moving higher early in the week with not much news but on Wednesday, the Federal Reserve minutes were released from the December meeting. Not only did they talk about the taper speed up, but also possibly let their balance sheet decline sooner. This would mean less liquidity for the market which caused the market some worry as this was not expected. Another headline was the disappointing December Jobs Report as there were less than 200,000 jobs added compared to estimates of 400,000. This could be some worry that the jobs market is tightening up even though we are still 3.6 million fewer jobs than pre-pandemic.

Quiz:

Quiz

What is the current labor force participation rate? (Scroll Down for Answer)

  1.    60.3%
  2.    60.8%
  3.    61.4%
  4.    61.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Answer below.

 

 

Have a Great Week!

 

 

 

 

 

 

 

 

 

Answer:

4)   61.9%, the pre-Covid rate was 63.4% and we are now at the lowest levels since the mid 1970’s.