Market Insights-march-2022

MARKET INSIGHTS

Monthly Market Roundup | U.S. Equities

Big Movers In February 2022

Nucor

Nucor (NUE): The steelmaker rallied following a strong quarterly report in late January. It’s benefiting from rising prices and strong metal demand. NUE is the only steelmaker in the S&P 500.

Paypal

PayPal (PYPL): Weak guidance weighed on the payments company for the third straight quarter. Earnings and revenue also missed estimates as pandemic-fueled growth slowed. PYPL has lost more than 60 percent of its value since the summer.

Solaredge

SolarEdge (SEDG): The green-energy stock gained early in the month thanks to strong guidance and bullish results from rival Enphase Energy (ENPH). It rallied again late in February as soaring oil prices drove interest in alternate sources of energy.

Epam

EPAM (EPAM): The software-development company plunged because of its large exposure to Eastern Europe. Management withdrew guidance on 28 February despite a strong quarterly report earlier in the month.

Mosaic

Mosaic (MOS): The fertiliser stock rallied after Russia’s invasion of Ukraine and subsequent sanctions squeezed global supplies.

Meta

Meta Platforms (FB): The social-media company formerly known as Facebook reported its first-ever decline in daily active users. It’s also struggling to adapt to privacy changes with the iOS operating system. Investors must now wait and hope that CEO Jeff Zuckerberg can engineer a major shift to virtual reality and the Metaverse.

Key Economics Events Last Month

TSG - Green icon

Strong Job Growth

January’s non-farm payrolls growth was more than triple the forecast amount. The previous two months were also revised higher by 709,000 jobs as wages rose and workforce participation increased. (4/2)

TSG - Red icon

Fed Official Seeks Quicker Rate Hikes

James Bullard, President of the St. Louis Federal Reserve, said interest rates should rise by a full percentage point over the next three meetings. That would potentially imply a 50-basis point hike on March 16. Bullard, a voting member of the Federal Open Market Committee, cited rising inflation. (10/2)

TSG - Red icon

Consumer Sentiment Plunges

The University of Michigan’s Consumer Sentiment Index unexpectedly fell to 61.7, its lowest reading since October 2011. The drop resulted from wealthy households feeling less optimistic amid a pullback in the stock market. The reading was later revised up to 62.8. (11/2)

TSG - Green icon

Durable Goods, Personal Spending

Orders for durable goods, including items like appliances and machinery, rose 1.6 percent in January. It was twice the forecast amount as pandemic-related shortages fueled demand. December’s reading was also revised sharply higher. Another report showed better-than-expected growth in personal spending. (25/2)

Key Futures Contracts

Product Name Current Month Expiration Next Month 1-Mon%
S&P 500 E-Mini (@ES) ESH22(March) 18 Mar 2022 ESM22(June) -3%
S&P 500 E-Mini Micro (@MES) MESH22 (March) 18 Mar 2022 MESM22 (June) -3%
Nasdaq-100 E-Mini (@NQ) NQH22 (March) 18 Mar 2022 NQM22 (June) -4.6%
Nasdaq-100 E-Mini Micro (@MNQ) MNQH22 (March) 18 Mar 2022 MNQM22 (June) -4.6%
Dow Jones E-Mini (@YM) YMH22 (March) 18 Mar 2022 YMM22 (June) -3.3%
Dow Jones E-Mini (@MYM) MYMH22 (March) 18 Mar 2022 MYMM22 (June) -3.3%

Events to Watch This Month

Date Event WhattoWatch
Wed, 2-Mar Jerome Powell in Congress Guidance on monetary policy during two days of testimony before U.S. lawmakers
Fri, 4-Mar Non-farm Payrolls Job growth, wages, labor-force participation
Thu, 10-Mar Consumer Price Index (CPI) Does inflation moderate?
Thu, 10-Mar Retail Sales, Fed meeting Consumer-spending trends, guidance on monetary policy
Fri, 18-Mar Quadruple Witching Stock options, futures, stock-index options and futures options expire, typically driving heavy volumes.

Sector Watch

Energy
Healthcare
industrials
materials
consumer-staples
financials
sp500
utilities
realestate
consumer-discretionary
technology
communications

Energy stocks advanced as geopolitical tensions pushed crude oil to an eight-year high.

Communication stocks led to the downside for a second straight month. The selloff in Meta Platforms accounted for much of the drop.

Technology stocks remained under pressure as interest rates increased. PayPal’s sharp decline also weighed on the sector.

Real Estate stocks tumbled as interest rates increased.

Consumer discretionaries declined as supply-chain issues weighed on retailers and the automotive sector.

Noteworthy Calls & Predictions

16-Feb:

Bank of America technical analyst Stephen Suttmeier: S&P 500 may be forming a head & shoulders. The potentially bearish reversal pattern could imply a drop toward 3,800, which would also be consistent with pullbacks in midterm-election years.

S&P 500
18-Feb:

JPMorgan quantitative strategist Khuram Chaudhry: Slower increases of earnings estimates suggest weakening fundamental backdrop.

Technology
22-Feb:

Bloomberg News: Heavy short interest and put buying suggest institutional investors are well hedged against downside in the S&P 500. That cautious sentiment may limit further weakness in the broader market.

S&P 500
24-Feb:

Wedbush Securities analyst Dan Ives: Worries about Russian cyberattacks could fuel demand for security software.

Technology
28-Feb:

Goldman Sachs economist Jan Hatzius: Inflationary expectations have become established as the job market remains strong. Personal Consumption Expenditures (PCE) index is now expected to rise 3.7 percent in 2022, up from an earlier forecast of 3.1 percent.

Inflation

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