Wall St posts declines for first week of 2022; Nasdaq has worst week since Feb

For the second month, the payroll report on Wednesday showed very positive numbers while Friday’s Labor Department report showed very negative numbers on jobs. This discrepancy might explain why the markets always wait for the latter before counting their chickens and today’s reaction was to nervously sell off again continuing the migration out of tech and into value.  Investors continue to nervously weigh the coming rate hikes, which they now consider to be too much after heralding them earlier, with continued worries over Omicron and what the Fed has now labeled as a “very tight” labor market.  Volume was right in line with recent averages at 10.2 billion. 

S&P 500 ends jumpy session nearly flat, a day after sell-off

As the commentary goes below, this week has seen a rotation out of tech and into value.  That certainly wasn’t true today as tech was barely touched but the value stocks represented by the Dow took a good hit.  This was despite the fact that many value stocks, particularly in the financial and energy sectors, did well in the S&P.  Other bad news included increasing unemployment claims and more slowing in the services sector.  The jobs report coming Friday should provide more clarity.  Volume remains above average at 11.1 billion. 

Nasdaq posts biggest daily drop since Feb after 'hawkish' Fed minutes

The indexes were all in the black and with the Dow and S&P at still new records until about 2 pm.  I’m guessing it was at 2 p.m. that the Fed December minutes were published stating the intent for 3 rate hikes in 2022.  Though this was widely expected and even hailed as a positive step towards taming inflation, investors suddenly thought of it as too hawkish and now considered the flip side – higher rates means higher borrowing costs and lower valuations.  Thus all three indexes went into a big dive, even the Dow, and the biggest daily drop in the Nasdaq since February.  This was all despite the plus side of payrolls increasing by more than 800,000 which was more than double the forecast. That alone should have caused a big rally but the trends have always been that the market puts a lot more stock in the Labor Department’s report which is due Friday.  The big sell off was on considerably higher than usual volume at just under 12.2 billion. 

Dow posts closing record high for 2nd day, boosted by banks

The rally continues but today investors showed their continued confidence in the recovery by migrating out of growth and back to value, shooting up the Dow but down the Nasdaq.  It also helped that the WHO cited more evidence that Omicron is milder than the other variants have been.  But awaiting Wednesday’s minutes from the December Fed meeting and the expected rate hikes coming this year (and the devaluation that may cause for tech), the markets are “going to punish growth stocks with high valuations.  Defensive stocks and value stocks are likely to outperform.”  December manufacturing data showed some cooling but this was more than balanced by signs of an easing supply chain.  Volume came in at 11.6 billion. 

S&P 500, Dow hit record highs on 1st trading day of 2022

The New Year has started with a bang with all the indexes way up and the Dow and S&P at new records as the market continues to ride the Omicron wave with the consensus that it will not be economically debilitating. Also boosting sentiment is the history that January is almost always one of the biggest months of the year and that we have now come through the biggest three year advance since 1999.  The index report card for 2021 looks like this – Dow +18.7%, Nasdaq +21.4%, S&P +27%.  For the first trading day of the year, volume was close to the 4-week average at 10.0 billion. 

2022 New Year's resolutions for individual investors. -- AAII

I thought it might be fun for this final night of the holiday to share this AAII December 30th article regarding New Year's resolutions that individual investors should be making.  Hope everyone had a great holiday. The next one isn't until Easter.  By then it'll be warmer. 

U.S. News Invested -- Some Of Our Best Articles of 2021

Happy New Year!  And what better way to bring in the new year than be revisiting some of the best articles in U.S. News Invested from 2021.  Enjoy!