The past week was filled with both ups and downs for risk assets, as markets struggled to digest news related to the Covid-19 omicron variant, surging inflation, and the latest Federal Reserve (Fed) messaging.
Inflation was once again a headline last week as the US Consumer Price Index (CPI) released its most recent reading. The November CPI report stated that inflation increased 6.8% year-over-year, marking the highest advance in 39 years, slightly higher than October’s 6.2% print.
The overall environment for accepting investment risk is slightly positive. This means that we advocate that client portfolios be positioned with a level of risk that is slightly above their long-term financial plan.
The Friday following Thanksgiving, typically a quiet day in equity markets, was anything but quiet this year as news of a significantly mutated COVID-19 variant discovered in South Africa led to a “sell first ask questions later” trading day. The S&P 500 index declined 2.3%, but many “reopening” stocks like airlines and cruise lines declined 10% or more.
Electric vehicles, also referred to as “EVs”, are getting renewed interest from both consumers and investors after Rivian stock skyrocketed after going public with the sixth largest initial public offering in US history. The EV market, which has been dominated by Tesla for the past decade, is getting more crowded by the day as newer companies such as Rivian, Lucid, Lordstown, and Nikola join larger established automotive companies like Ford, General Motors, and Toyota in launching new options.
Inflation dominated financial headlines this week, as the latest US Consumer Price Index (CPI) reading was higher than anticipated. On Wednesday, the latest year-over-year CPI reading of 6.2% was released, marking the biggest increase in more than three decades.
Equity markets rallied again last week, as investors applauded a host of positive news throughout the week. The much-awaited Federal Reserve meeting wrapped up and while they shared plans to gradually taper their bond buying program between now and mid-2022, Fed President Jerome Powell indicated they are in no hurry to begin raising rates.
The overall environment for accepting investment risk is neutral. US Economic recovery solidly on track, and the robust nature of the recovery has led to higher prices as well as challenges supplying finished goods fast enough to meet demand.
We recently held our Quarterly Market Update Webinar. Watch the replay to receive market updates and predictions as well as hear from a member of the OneAscent Investment Committee on current portfolio positioning and performance.
Risk assets continued their upward trajectory last week, with nearly every major equity index posting positive returns through Friday. The S&P 500 (a proxy for large-cap US stocks) was up 1.7% for the week and the MSCI ACWI index (a proxy for global large-cap stocks) climbed 1.3%.
