Economic Market Summary

Market Down and Dirty

Last Week’s Economic/Market Summary


  • U.S. equity indices all ended the week lower in risk-off trading. 
    • S&P 500 -2.68% Dow -1.86%, Russell 2000 -3.16%, Nasdaq -3.83%1 
      • The Al-Country World Index declined 2.71%.1 
    • S&P 500 sub-sectors were almost all lower last week. 
      • Defensive Consumer Staples & Real Estate were the lone positive sectors. 1 
      • Communications & Energy led to the downside. 1 
    • The CBOE Volatility Index (VIX) gained 24.10% to close at 28.17. 1 
  • The US Treasury market saw rates rise albeit at a slower pace on the long-end. 
    • US 2yr +0.21% at 2.66%, 10yr +0.09% at 2.91%, 30yr +0.02% to 2.94%.1 
    • The short-end shot higher following the aggressive comments from the Fed. 
  • Commodities as an aggregate asset class moved lower last week. 
    • WTI Crude declined 5.18% to settle at $101.41/barrel. 1 
    • Gold lost 2.39%.1 
    • The US Dollar index rose 0.61%.1 
  • In our opinion, U.S. economic data was mixed last week. 
    • US business activity was mixed in April with manufacturing rising & services declining. 1 
    • Higher mortgages rates continued to slow housing data points. 1 
    • The AAII measure of bullish investor sentiment dropped below 20% last week. 1 
  • An index of equities outside the US (FTSE All-World ex-US) lost 2.79%.1 


  • US stock markets started the week off hot before hawkish comments from Federal Reserve Chairman Jerome Powell seemed to cause a significant sell-off across asset classes. 
    • The S&P 500 was positive for the week heading into Thursday before erasing 5% of value by the end of trading on Friday. 1 
    • Poor earnings from large companies also seemed to stoke the downward flame in some areas of the market that have been running hot for many years. 
    • The more growth oriented areas of the market led to the downside as the small-cap tracking Russell 2000 and Nasdaq both dropped between 3-4%.1 
  • S&P 500 subsectors finished the week almost all lower. 
    • Consumer Staples (+0.51%) and Real Estate (+1.25%) were the lone positive sectors. 1 
    • Communications led to the downside with a loss of almost 8% led by Netflix earnings miss. 1 
    • Energy also sold off as it ended the week down 4.5%.1 
      • Continued covid issues in China and the threat of a more aggressive Fed seemed to dampen the runaway energy inflation thesis of many. 
  • The US Treasury market reverted back to flattening as the short-end that is mostly influenced by Fed policy saw rates shoot higher while the long-end had modest increases. 
    • Treasuries are already off to their worst start since data started being kept for an index of issues in 1972 by Bloomberg. 1 
    • On Thursday, Fed chair Powell appeared to validate the alarmist camp when he said “front-end loading” its rate hikes may be appropriate and characterized the labor market as “unsustainably hot.” 1 
      • We believe these comments helped push yields higher as on Friday, the 2yr Treasury yield, which is highly sensitive to monetary policy changes, rose to 2.69%. 
      • The 10-year yield ended at 2.9%, up 0.07% on the week, after nearly reaching 3% on Wednesday. 1 
    • Notably, Powell’s remarks and the aggressive pricing of a more rate hikes by the market failed to stop inflation expectations from rising. 1 
      • By Friday, Federal Reserve Chair Jerome Powell’s endorsement of aggressive actions to curb inflation sent traders racing to price in half-percentage-point interest-rate increases at the bank’s next four meetings, anticipating a stark break with its decades-long practice of tightening monetary policy gradually. 
    • As we’ve discussed, at some point the Fed could overshoot policy on combating inflation and cause the long-end to become very attractive in a risk-off environment. 
      • In our opinion, the risk to the Fed at this time is not tightening enough as opposed to tightening too much. 
      • They can easily stimulate if they cause a recession by overdoing it.
  • Earnings season is firmly underway with 20% of S&P 500 companies reporting thus far. 1 
    • 79% of companies have beaten earnings expectations & 69% have beaten revenue estimates. 1 
    • The average earnings growth rate so far is 6.6% which is the lowest since Q4 of 2020. 1 
    • The jury is out on valuations at this point in the cycle as the 10yr yield would suggest we could see the P/E of the S&P come down more from here. 

Ryan A. Mumy, CFP®,
AIF® – Chief Investment Officer

Contact: 828/855-9400 or 

 1 Source: Bloomberg – 4/22/2022  

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