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Gradient Investments Weekly Talking Points 02/21/2022
All data is for the week ended February 18, 2022. Note the markets are closed today in honor of Presidents Day.
Stocks
Major stock indices were down across the board, with the benchmark S&P 500 down 1.52%, the Russell 2000 down 1.00% and the NASDAQ declining 1.73%. Overseas, the developed markets index (MSCI EAFE) dropped 1.86% as the emerging markets (MSCI EEM) lost 0.67%. Within the US, staples and materials were the best performing sectors while energy and communication services were the poorest performers. By style, value outperformed growth.1
Fixed Interest
The 10-year treasury interest rate was unchanged for the week at 1.92%.1 While fears of rising interest rates continue, tensions in Eastern Europe are driving more foreign investors into safer countries, primarily the U.S. Also notable is the interest rate on 10-year German bonds, which is now 0.20% vs. negative 0.18% at the start of the year; it has been negative for most of the past three years.2
Commodities
US crude inventories rose 1.1 million barrels for the prior week, far ahead of the consensus estimate for a rise of 200,000 barrels. U.S. crude oil inventories are about 10% below the five year average for this time of year.3 The price of West Texas crude finished the week at $91.07 per barrel, down 2.18% for the week.4
Economic Data
Producer prices for January rose 1.0% month-over-month, double the consensus estimate and sharply accelerating from 0.4% in the previous month. On an annual basis, it rose 9.7%, in line with December’s reading. Ex-volatile food and energy, core prices increased 0.9% from December or 6.9% on a year-over-year basis.5
US retail and food service sales rebounded in January, rising 3.8% from December, nearly double the consensus estimate, although the prior month’s data was revised down. On a year-over-year basis, the index rose 13.0%. Notably, restaurant sales were up 27.0% on a year-over-year basis.6
Industrial production rose 1.4% in January—well ahead of the consensus estimate of a 0.5% gain – after a 0.1% decline in December.7 Capacity utilization was also stronger than expected, rising to the strongest level since early 2019.8
Company News9
Equinix Inc. (EQIX), a G50, Core Select and Contrarian Choice holding, stock rose 3.19% last week following their report of revenue and earnings that firmly beat expectations. Bookings for this data center REIT were at a new record. 10
Fidelity National Information Services (FIS), a G50 holding, management guided the full year in line with consensus expectations, but with the current quarter’s earnings declining so growth for the full year are expected to be back- end loaded. Along with other legacy financial technology companies, the stock has suffered; FIS declined last week by 14.55%.11
Did you know…
Around 760 A.D., the demand for books in Baghdad was so high that any traders who brought books were rewarded with the weight of the books in gold.
Mariann Montagne, CFA
Portfolio Manager
Sources:
1 JP Morgan Weekly Market Recap 2-21-21
3 US Energy Information Administration 2-16-22
5 US Bureau of Labor Statistics 2-15-22
8 MarketWatch “US Industrial Production Jumps” 2-16-22
9 All weekly changes in company stock prices: Yahoo Finance
10 Equinix Inc. press release 2-16-22
11 Fidelity National Information Services press release 2-15-22
Advisory services are offered through American Retirement Advisors, Inc., a Registered Investment Advisor in the State of Michigan. Insurance products and services are offered through American Retirement Solutions an affiliated company. American Retirement Advisors, Inc. and American Retirement Solutions are not affiliated with or endorsed by the Social Security Administration or any government agency. The information contained herein should in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services to any residents of any State other than the State of Michigan or where otherwise legally permitted. All written content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Moreover, this material has been derived from sources believed to be reliable, but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed.
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