US Stock Markets Ended Jan. 21, 2022

Last week was a white-knuckle trading week. Equities plummeted as the Nasdaq 100 entered correction territory closing Friday down 11.51% for the year. The S&P 500 is off 8.25% from its early January highs. Last week, concerning inflation and corporate profits accelerated an overall risk off posture by investors. We saw flows from cyclical sectors communication services, financials, and consumer discretionary, towards lower beta sectors like utilities, consumer staples and real estate. Early week headlines that Microsoft Inc. entered into agreement to buy video game maker Activision Blizzard Inc. for nearly $68b, or $95 in cash per share drove shares 24.41% higher last week. Activision shares closed Friday at $81.35, or 16.78% discount from the takeout price, as worries of an FTC review drove concerns that such a large acquisition might not be approved. Naturally, Take Two Entertainment and EA Sports Inc., two other video game producing companies, were the 2nd and 3rd top performing names in the S&P 500 index, returning 7.98% and 6.57% respectively on expectations that their content is now more valuable. Earnings season started to ramp up last week. The biggest headlines were driven by Netflix Inc. whose shares fell 24.39% after they guided 1Q22 subscriber growth of only 2.5m when analysts expected 6.3m. CEO Reed Hastings stated that competition in the streaming industry has become a headwind for subscriber growth. Netflix's competition statements reverberated through the industry as streaming rivals Discovery Inc. and ViacomCBS Inc. returned -16.00% and -15.13% respectively. Next week earnings season will accelerate as 108 names in the S&P 500 are expected to report quarterly results. Noteworthy names expected to report include Apple Inc., Microsoft Corp., Tesla Inc., Visa Inc., Johnson & Johnson, Mastercard Inc., Chevron Corp., Comcast Corp. and Verizon Communications Inc.
Posted on Monday, January 24, 2022 @ 8:21 AM

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.