We came into the week with a bang and went out with a whimper. After a big start to the week, it took a last-minute panic bid to push stocks slightly into the green for the trading session. For the week, the Dow fell 0.1%, while the S&P 500 rose 0.1% and the Nasdaq advanced 0.7%. The Dow snapped two straight weeks of gains while the S&P 500 and Nasdaq each advanced for a third straight week. The S&P sectors were mostly positive, with real estate, utilities, and consumer staples faring best. Financials and industrials were the worst laggards. Small caps were demonstrating relative strength on the day, with the Russell 2000 closing with a gain of 1.1%. The stock market may be taking a breather after having a good March and being within striking distance from an all-time high despite geopolitical concerns and hot inflation, Considering the stock market’s current level, the Russia-Ukraine war, and expectations for the Fed to potentially become more aggressive hiking rates to fight high inflation. Confirming this fundamental suspicion is price action, where All Major US equity markets lost key technical levels. S&P back below its 100-DMA, Dow broke back down through its 100- and 200-DMA, Nasdaq failed at its 100-DMA, as did Russell 2000. The SPY is still well above its 200-DMA at 444 (red line). Bulls will need to defend this level next week.
We remain optimistic regarding the second half of 2022 and think growth stocks will resume their leadership. We have more likely than not seen peak inflation readings and expect inflation to moderate towards year end. There is a tremendous amount of noise in the marketplace and investors are pessimistic about the future. Investors that buy tier two and tier three technology companies today will benefit 3 to 5 years from now
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Best,
Matt
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