Inflation: No Relief in Sight!

by | Feb 15, 2022 | Market Update

We’ve seen big moves in equities to start the year.  This was the worst January for the S&P 500 since 2009 while at the same time it’s been the best start to the year for Value stocks in decades.  We expect market volatility to remain high and headline-driven for a while longer.


Expect More Volatility

The new year is certainly off to a volatile start.  The huge month-end rallies continued a trend of big swings that has defined markets since the Federal Reserve signaled its intention to tamp down inflation that had swelled to the fastest since the early 1980s.  In one session, the Nasdaq 100 erased a loss of almost 5%, while the S&P 500 staged three straight days with swings that topped 3%.  Markets are finding themselves in a tug of war between strong earnings and economic growth, and the specter of the Fed raising rates.  And not to mention a normalization of egregious valuations.  

Last Thursday we saw another eye-popping inflation number as the CPI hit 7.5%.  This has sent fears through the stock and bond market, with equities selling off and 10-year bond rates rising.  The good news is that corporate earnings continue to come in strong for most companies.  We may see this back-and-forth between markets weighing the strong earnings versus the high inflation numbers for a while. 

Sources: Aptus Capital Advisors, Bloomberg, Yahoo Finance

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