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Bob Carey
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  US Stock Markets Ended March 18, 2022
Posted Under: Weekly Market Commentary
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The S&P 500 Index completed its best performing week since November 2020, returning over 6% after two straight weeks of declines. The market appetite for risky assets returned as the Goldman Sachs Non-Profitable Tech Index roared to an 18% return indicating that dip buyers believe that the market has sufficiently punished growth stocks. Investors shrugged off the widely-anticipated rate hike after the Wednesday FOMC meeting as the war in Ukraine remains challenging but risk of global financial contagion appears minimal. A survey of FOMC members shows that the median prediction for the end of 2022 target rate has risen 100bps since the 12/15/2021 meeting. This week's initial jobless claims of 214,000 show that United States maintains near full employment and inflation remains the larger problem for the Fed to tackle from its dual mandate. Many in the economic community believe that the U.S. economy has a strong enough foundation of fundamentals to withstand rising rates without spiraling into a recession. Equities now sit at a more comfortable valuation than a few months ago as the P/E ratio of the S&P 500 has retraced from 22.8x at the beginning of the year to 19.75x currently. On Thursday the Senate approved a $1.5T spending bill that included $14B in emergency aid to Ukraine and $782B to defense spending, a 5.6% bump from the previous year's defense budget which was applauded by defense contractors. Oil retreated from a high above $123 last week and closed below $100 on both Wednesday and Thursday this week. Consumer Discretionary and Information Technology were the best performing sectors in the S&P 500 while Energy lagged. Berkshire Hathaway Class A shares closed above a milestone $500,000 price on Wednesday as the sixth largest company in the S&P 500 has quietly outperformed the index by over 16% year to date. EPAM Systems (EPAM, +47.1%) was the best performing stock in the S&P 500 as the company which has significant operations in Russia was rewarded as fears of a Russian default abated. The four worst performers in the S&P 500 were all energy companies, led by Schlumberger Ltd. (SLB, -7.4%). With 4Q21 earnings season over, the U.S. equity market will most likely be preoccupied with inflation data, GDP growth, and continued developments in Eastern Europe for the next month.
Posted on Monday, March 21, 2022 @ 9:03 AM • Post Link Share: 
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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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