Hello Eagle Wealth Community,
With the new year still fresh in our minds, it’s a good time to take inventory of what might be just around the corner in the coming months.
It could be any number of things — changes in your household, moving to a new home that better fits your needs, or maybe even changing jobs or starting a new business. And even if it seems far away now, there’s always retirement to think about.
Tax season is also quickly approaching and while the deadline was extended the last two years, this year it’s right on time.
This week we’re happy to share our 2022 tax planning guide. Click here to read it. Inside you’ll explore where your tax dollars go, some of the ways tax filing may look different in 2022, and what you can do to prepare.
Please let us know if have any questions about the upcoming tax season.
Sincerely,
Your Eagle Wealth Team
Market Volatility in the News
Markets are seeing surges of volatility, which is never fun.
Could these jitters turn into a correction?
Absolutely.
Should we panic?
Definitely not.
Here are a couple of reasons why:
Volatility and corrections in the face of bad headlines are normal and occur regularly. In fact, pullbacks of 5 percent happen about once a year. We can expect to see a serious 10 percent correction about every 18 months and a true bear market about once every six years.
And here’s the flip side: just as quickly as markets drop, they can rise again. For example, we’ve learned since 1974, the S&P 500 has historically gained 24 percent one year after the bottom of a market correction.
Now, that doesn’t mean that the past can predict the future, but it can be a useful guide. History rarely repeats itself, but it often rhymes.
If you’re not in the market when it moves, you’ll lose out on all those gains. No one knows where the bottom is until it’s past. And selling risks missing out on the whole thing.
The truth of the matter is bad headlines sell. That’s why we see them all the time. The reality behind them is usually much more complex and market movements shouldn’t be accepted at face value.
As an Eagle Wealth client, you have a financial plan built to weather market volatility, and a team looking out for you. Please give us a call if you have questions or concerns. We’re always here to help.
The Week on Wall Street
Stocks extended their January retreat as worries over inflation and rising bond yields continued to exert downward pressure on prices.
The Dow Jones Industrial Average slid 4.58%, while the Standard & Poor’s 500 sank 5.68%. The Nasdaq Composite index dropped 7.55% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slipped 0.61%.1,2,3
Another Turbulent Week
After the holiday weekend, stocks found little respite from this month’s selling pressures. The week began with the 10-year Treasury yield hitting a two-year high that triggered a broad retreat in stocks, with technology and other high-growth companies bearing the brunt of the losses. The Nasdaq Composite officially entered correction territory and closed below its 200-day moving average for the first time since April 2020.4
Stocks struggled throughout the week, rallying in early trading on both Wednesday and Thursday on solid corporate earnings and stabilizing bond yields, only to end lower on late-day selling. While last year may have been distinguished by “buying on the dip,” this week reflected a different mindset, “selling on the rebound.” Stocks extended their losses in the final hours of the Friday trading session to conclude a difficult week.
Rate Hike Expectations Rise
Recent market volatility has stemmed predominantly from inflation concerns and how aggressive the Fed will be in fighting it. This reaction reflects the market's pricing of rate hike probabilities, and their estimation of the Fed's reaction.
Last week's interest rate futures suggested that investors expect four or five rate hikes this year, up from three to four the previous week. Markets are pricing a 32% probability of 4-5 rate hikes by December and a nearly 28% probability of 5-6 rate hikes by year-end. Of course, the Fed will act independently of the market, but it provides insight into the recent run-up in yields and continuing pressure on high-growth stock valuations.5,6
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THE WEEK AHEAD
Key Economic Data
Monday: Purchasing Managers’ Index (PMI) Composite Flash.
Tuesday: Consumer Confidence.
Wednesday: New Home Sales. FOMC Announcement.
Thursday: Gross Domestic Product (GDP). Durable Goods Orders. Jobless Claims.
Friday: Consumer Sentiment.
Source: Econoday, January 21, 2022
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
Companies Reporting Earnings
Tuesday: Microsoft Corporation (MSFT), General Electric Company (GE), Verizon Communications, Inc. (VZ), Johnson & Johnson (JNJ), Lockheed Martin Corporation (LMT), Texas Instruments, Inc. (TXN), American Express Company (AXP), Capital One Financial Corporation (COF), Raytheon Technologies Corporation (RTX).
Wednesday: AT&T, Inc. (T), Intel Corporation (INTC), The Boeing Company (BA), Tesla, Inc. (TSLA), Abbott Laboratories (ABT), ServiceNow, Inc. (NOW), KimberlyClark Corporation (KMB), Norfolk Southern Corporation (NSC).
Thursday: Apple, Inc. (AAPL), Visa, Inc. (V), Mastercard, Inc. (MA), McDonald’s Corporation (MCD), Northrop Grumman Corporation (NOC), Blackstone, Inc. (BX), Southwest Airlines Co. (LUV), The SherwinWilliams Company (SHW), Mondelez International, Inc. (MDLZ).
Friday: Caterpillar, Inc. (CAT), Chevron Corporation (CVX), ColgatePalmolive Company (CL).
Source: Zacks, January 21, 2022
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
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