Another Turbulent Week
After the holiday weekend, stocks found little respite from this month’s selling pressures. The week began with the 10-year Treasury yield hitting a two-year high that triggered a broad retreat in stocks, with technology and other high-growth companies bearing the brunt of the losses. The Nasdaq Composite officially entered correction territory and closed below its 200-day moving average for the first time since April 2020.4
Stocks struggled throughout the week, rallying in early trading on both Wednesday and Thursday on solid corporate earnings and stabilizing bond yields, only to end lower on late-day selling. While last year may have been distinguished by “buying on the dip,” this week reflected a different mindset, “selling on the rebound.” Stocks extended their losses in the final hours of the Friday trading session to conclude a difficult week.
Rate Hike Expectations Rise
Recent market volatility has stemmed predominantly from inflation concerns and how aggressive the Fed will be in fighting it. This reaction reflects the market's pricing of rate hike probabilities, and their estimation of the Fed's reaction.
Last week's interest rate futures suggested that investors expect four or five rate hikes this year, up from three to four the previous week. Markets are pricing a 32% probability of 4-5 rate hikes by December and a nearly 28% probability of 5-6 rate hikes by year-end. Of course, the Fed will act independently of the market, but it provides insight into the recent run-up in yields and continuing pressure on high-growth stock valuations.5,6
This Week: Key Economic Data
Monday: Purchasing Managers’ Index (PMI) Composite Flash.
Tuesday: Consumer Confidence.
Wednesday: New Home Sales. FOMC Announcement.
Thursday: Gross Domestic Product (GDP). Durable Goods Orders. Jobless Claims.
Friday: Consumer Sentiment.
Source: Econoday, January 21, 2022 The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
This Week: Companies Reporting Earnings
Monday: International Business Machines (IBM).
Tuesday: Microsoft Corporation (MSFT), General Electric Company (GE), Verizon Communications, Inc. (VZ), Johnson & Johnson (JNJ), Lockheed Martin Corporation (LMT), Texas Instruments, Inc. (TXN), American Express Company (AXP), Capital One Financial Corporation (COF), Raytheon Technologies Corporation (RTX).
Wednesday: AT&T, Inc. (T), Intel Corporation (INTC), The Boeing Company (BA), Tesla, Inc. (TSLA), Abbott Laboratories (ABT), ServiceNow, Inc. (NOW), KimberlyClark Corporation (KMB), Norfolk Southern Corporation (NSC).
Thursday: Apple, Inc. (AAPL), Visa, Inc. (V), Mastercard, Inc. (MA), McDonald’s Corporation (MCD), Northrop Grumman Corporation (NOC), Blackstone, Inc. (BX), Southwest Airlines Co. (LUV), The SherwinWilliams Company (SHW), Mondelez International, Inc. (MDLZ).
Friday: Caterpillar, Inc. (CAT), Chevron Corporation (CVX), ColgatePalmolive Company (CL).
Source: Zacks, January 21, 2022 Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
Food For Thought
“Brass shines as fair to the ignorant as gold to the goldsmiths.”
– Elizabeth I
Tax Tips
Planning on Starting a Business?
Here Are Some Tax Tips You Need to Know
Whether you own your own company or want to start making some side income off a hobby, there are some important tax considerations to know:
- The form of business determines what kind of tax return you will need to file.
- The most common business structures are: sole proprietorship, partnership, corporation, S corporation, and Limited Liability Company (LLC).
- Choose a tax year for your annual accounting period. Your tax year can be either 12 consecutive months starting January 1 and ending December 21 or 12 consecutive months ending on the last day of any month except December.
- Apply for an Employer Identification Number used to identify your business.
* This information is not intended to be a substitute for specific, individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov7
Healthy Living Tip
Simple Salt Swaps
If you want to trim salt from your diet or lower your sodium intake, there are many small swaps you can make. Sure, ditching the chips and pretzels may help, but there is hidden sodium in many other foods. Here are some swaps you can make that are small enough to incorporate them into your daily diet:
- Switch out your cold cuts for home-cooked turkey or chicken. Processed cold cuts often have high sodium levels, so making this swap means that you can still enjoy delicious sandwiches at home. Alternatively, you can look for low-sodium cold cut brands.
- Swap bread and rolls for a bowl of hearty oatmeal. While bread itself doesn’t have a lot of sodium, we often eat a lot of it so that sodium can add up. Oats are a filling serving of whole grains.
Making just these two swaps will help reduce your sodium intake both at home and on the go.
Tip adapted from Harvard Medical School8
Weekly Riddle
A woman sailed into the Bahamas
with her boat on the 28th of April.
She stayed in the Bahamas for three weeks
and then left in April.
How is this possible?
Last week’s riddle: How many times
can you subtract the number 4 from 40?
Answer: Once. After that,
you will no longer be working with the number 40.
Photo of the Week
Burgundy and gold Hawaiian ti plant (Cordyline minalis)
nestled in yellow, ginger, and blue palm fronds.
