All data is for the week ended April 22, 2022
Stocks
Equities were down across all the major indices, with the S&P 500 declining 2.74%, the Russell 2000 dropping 3.20% and the NASDAQ losing 3.83%. Overseas, the international developed markets index (MSCI EAFE) declined 1.64% while the emerging markets (MSCI EM) dropped 3.71%. The declines can be attributed to statements by the Federal Reserve and the European Central Bank which indicate they will be more aggressive about tightening the money supply in the coming months. Within the US, value outperformed growth while the leading sectors were real estate and consumer staples.1
Fixed Income
Interest rates rose and values fell, with the benchmark 10-year treasury finishing the week with a 2.90% yield, up 7 basis points. The yield curve flattened. Since the start of the year, the aggregate bond index has dropped 9.49%. 1
Commodities
With all the discussion of inflation across the commodities sector, futures prices for key inputs have declined significantly since their highs in early March. These include West Texas Crude oil which is down 18%, gasoline which has declined 11% and wheat which is down 17%.2
Economic Data
China released a number of economic data points that showed a notable slowing in activity. Gross domestic product for the first quarter rose 4.8% year-over-year, exceeding market expectations. Economic activity data for March showed the impact of China’s zero tolerance policy for Covid on retail sales as they declined 3.5%, the first year-over-year decline since 2020. Also, the annual rate of increase in industrial production slowed.3
U.S. home builders started construction on homes at a rate that was a 0.3% increase from the previous month and a 4% increase from a year ago. Permitting for new homes were up 0.4% from February and 6.7% from a year ago. Both starts and permits were ahead of consensus expectations due to the strength in multi-family units (apartments and condos).4 Existing-home sales (which represent 90% of total home sales) fell 2.7% in March from the prior month and fell 4.5% from a year earlier. The median existing-home price rose 15% in March from a year earlier, to a record high of $375,300.5
New U.S. jobless claims fell slightly to 184,000 in mid-April and stayed near a 54-year low, reflecting a tight labor market in which work is easy to find and layoffs are at record lows.6
Company News7
AB Volvo (VLVLY), a G40-I holding, reported sales and earnings that were ahead of expectations, particularly for truck sales, despite concerns for supplies. Shares of the Sweden-based vehicle manufacturer rose 6.82% for the week.8
Netflix Inc. (NFLX), a G33 and Core Select holding, reported subscriptions declined during the last quarter for the first time in over 10 years and warned that the losses will likely accelerate sharply for the current quarter. Shares fell 36.8% for the week.9
NextEra Energy Inc. (NEE), a G50 holding, revealed that US government regulators are probing solar panel imports which is expected to delay solar and storage installations by at least a year. Shares fell 10.7% for the week.10
Did you know…
After World War II, a small electronics shop was built in a bomb-damaged department store in Tokyo. The company, Tokyo Telecommunications Engineering Corporation, had only $530 and 8 employees. The company invented Japan’s first tape recorder and, in 1958, changed its name to Sony.
Mariann Montagne, CFA
Portfolio Manager
Sources:
1 JP Morgan Weekly Market Recap 4-25-22
3 China Bureau of National Statistics 4-18-22
4 Census Bureau press release 4-19-22
5 National Association of Realtors 4-20-22
6 US Department of Labor 4-21-22
7 All weekly changes in company stock prices: Yahoo Finance
8 AB Volvo press release 4-22-22