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From Your Advisors at EBW: Worries Converge

From Your Advisors at EBW: Worries Converge

April 26, 2022
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Worries Converge


Equities Falter


Investor concerns about slowing corporate earnings and prospects for rapidly
rising interest rates deepened throughout Friday’s trading session, undoing gains
early in the week. The Dow Industrials lost over 980 points (-2.8%) on Friday, its
worst single-day performance since October 2020 to cap its fourth-straight weekly
loss. The S&P 500 capped a three-week slide near a one-month low. After a late
March revival, the Nasdaq Composite is down almost 10% for the month, while
the S&P 500 and Dow have retreated 5.7% and 2.5% respectively in April.


For the Week…


The S&P 500 fell 2.74%, extending its YTD loss to 9.99%. The Dow Jones
Industrial Average lost 1.86%, and the Nasdaq Composite tumbled 3.83%. The
S&P 500 is back in correction status, down 10.6% from its January high, while
the Nasdaq is in a bear market, off over 20% from its November 2021 record.


Aggressive Rate Prospects


Fed Chairman Powell signaled last week that the central bank will likely hike
interest rates by a ½-point at their May 3-4 FOMC meeting. He also indicated
similar incremental increases may be warranted after that to bring inflation back
to their 2% target. A May rate hike will mark the Fed’s first set of increases at
back-to-back meetings since 2006 and first ½-point increase since 2000.


Real Estate Performs Best


Just two of the 11 major sector groups posted gains last week, Real Estate
(+1.24%) and Consumer Staples (+0.49%). Communication Services (-7.74%),
Energy (-4.56%) and Materials (-3.72%) tumbled the most, while Industrials
(-1.54%) and Consumer Discretionary (-1.77%) fell the least.


Treasury Yields Edge Higher


Treasury yields showed signs of stabilizing as the yield on benchmark 10-year
Treasury notes ended Friday at 2.902%, down in two of the final three days last
week. Its yield climbed as high as 2.94% on an intra-day/week basis as Fed
Chairman Powell essentially sealed his case for a 50 basis point May rate hike.
The U.S. Dollar Index strengthened for a third consecutive week, climbing 0.72%
last week. U.S. WTI crude oil futures declined just over 4.5% last week, ending
Friday at $102.07/barrel.

About Cetera® Investment Management
Cetera Investment Management LLC is an SEC registered investment adviser owned by Cetera Financial Group®. Cetera Investment Management provides market perspectives, portfolio guidance, model management, and other investment advice to its affiliated broker-dealers, dually registered broker-dealers and registered investment advisers.
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“Cetera Financial Group” refers to the network of independent retail firms encompassing, among others, Cetera Advisors LLC, Cetera Advisor Networks LLC, Cetera Investment Services LLC (marketed as Cetera Financial Institutions or Cetera Investors), Cetera Financial Specialists LLC, and First Allied Securities, Inc. All firms are members FINRA / SIPC. Located at 655 W. Broadway, 11th Floor, San Diego, CA 92101.
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No independent analysis has been performed and the material should not be construed as investment advice. Investment decisions should not be based on this material since the information contained here is a singular update, and prudent investment decisions require the analysis of a much broader collection of facts and context. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The opinions expressed are as of the date published and may change without notice. Any forward-looking statements are based on assumptions, may not materialize, and are subject to revision.
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Glossary
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ.
The S&P 500 is an index of 500 stocks chosen for market size, liquidity and industry grouping (among other factors) designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe.
The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad based index