Weekly Stock Market Summary

Soham Aher, Senior Correspondent, India

12.00am EST, 31st January 2022

· NASDAQ finishes 3% higher, putting it just outside of a bear market

· US treasury yields also rose in response to the Fed’s hawkish signals

· Europe’s stocks fell for the fourth week in a row due to rising interest rates and tensions of Russian and Ukrainian conflict

· Asia mixed as global markets continue to adjust to monetary policy expectations

· Consumer spending fell by -0.6% m/m

· Crude oil prices were slightly higher, while gold was lower.

The Fed Prepares for a March Move

This past week was a busy one for investors and markets alike. The FOMC meeting on Tuesday and Wednesday resulted in the Fed preparing markets for a March move: the Fed is poised to raise rates for the first time since 2018, as well as end its balance-sheet expansion.

Following a volatile week, the market held on to a solid rally on Friday afternoon, with the S&P ending the week up around 0.8 percent, but the index is still down around -7.0 percent for the year (although still up nearly 95 percent since the March 2020 lows).

While it is believed the more speculative and higher-valued parts of the market will continue to be volatile, we see opportunities forming in other parts of the market, particularly those linked to rising rates and cyclical economic growth.

The Three Primary Takeaways from the FOMC Meeting:

· The Fed will act in March – possibly aggressively early in the cycle.

· Inflation is a key variable

· Balance-sheet reduction is coming