Rate Hike Talk Sinks Stocks

Rate Hike Talk Sinks Stocks

January 25, 2022
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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

This Week: 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.

This Week: Companies Reporting Earnings

Monday: International Business Machines (IBM).

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.





WEALTH WATCH: Be Mindful of Emotions During Downward Pressure

The HCM-BuyLine® has weakened and we are monitoring to see if a change in trend is imminent. Growth stocks, technology, semiconductors, small caps, and just about everything has dropped at a fast pace since the start of the year. A relief rally is probably pretty close at hand, but the question is will it hold, or is this the start of a downtrend? On a short-term basis we are... [READ MORE] 7

This communication is issued by Howard Capital Management, Inc. It is for informational purposes and is not an official confirmation of terms. It is not guaranteed as to accuracy, nor is it a complete statement of the financial products or markets referred to. Opinions expressed are subject to change without notice. 

Planning on Starting a Business? Here Are Some Tax Tips You Need to Know

Whether you own your own company or want to start making some side income off a hobby, there are some important tax considerations to know:

  • The form of business determines what kind of tax return you will need to file.

  • The most common business structures are: sole proprietorship, partnership, corporation, S corporation, and Limited Liability Company (LLC).

  • Choose a tax year for your annual accounting period. Your tax year can be either 12 consecutive months starting January 1 and ending December 21 or 12 consecutive months ending on the last day of any month except December.

  • Apply for an Employer Identification Number used to identify your business.

* This information is not intended to be a substitute for specific, individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional. 7

Simple Salt Swaps

If you want to trim salt from your diet or lower your sodium intake, there are many small swaps you can make. Sure, ditching the chips and pretzels may help, but there is hidden sodium in many other foods. Here are some swaps you can make that are small enough to incorporate them into your daily diet:

  • Switch out your cold cuts for home-cooked turkey or chicken. Processed cold cuts often have high sodium levels, so making this swap means that you can still enjoy delicious sandwiches at home. Alternatively, you can look for low-sodium cold cut brands.

  • Swap bread and rolls for a bowl of hearty oatmeal. While bread itself doesn’t have a lot of sodium, we often eat a lot of it so that sodium can add up. Oats are a filling serving of whole grains.

Making just these two swaps will help reduce your sodium intake both at home and on the go.8

Whole Wheat Pasta With Lemon Kale Chicken

Servings: 2

Time: 20 minutes 

Ingredients 

  • 4 oz whole wheat spaghetti
  • 1 boneless, skinless chicken breast, cubed
  • 5 tablespoons extra virgin olive oil
  • 2 cloves garlic, minced
  • ¼ teaspoon red pepper flakes
  • 2 cups curly kale, chopped, ribs removed
  • 1 lemon lemon zest
  • 1 tablespoon lemon juice
  • kosher salt, to taste
  • ground black pepper, to taste

Directions

  1. Boil salted water and cook the pasta for 1 minute less than the time indicated on the package. When the pasta is finished cooking, reserve ¼ cup (60 ml) of pasta water
  2. Meanwhile, heat two tablespoons of olive oil in a cast-iron skillet. Season cubed chicken with salt and pepper, add it to the skillet, and brown it on each side. Once cooked through — about 2 to 4 minutes — remove from skillet and reserve.
  3. Heat remaining three tablespoons of olive oil in skillet and add garlic and red pepper flakes. Cook until fragrant, about 1 minutes.
  4. Add kale, lemon zest, lemon juice, salt, and reserved pasta water. Cook until kale is tender, about 3 minutes.
  5. Add cooked chicken, and pasta. Stir to coat, and serve immediately. Enjoy!10

Stay safe!

Footnotes and Sources

1. The Wall Street Journal, January 21, 2022

2. The Wall Street Journal, January 21, 2022

3. The Wall Street Journal, January 21, 2022

4. CNBC, January 17, 2022

5. The Wall Street Journal, January 18, 2022

6. CME, January 19, 2022

7. howardcm.com, January 14, 2021

8. IRS.gov, September 13, 2021

9. Health.Harvard.edu, August 1, 2018

10. tasty.co. June 3, 2020

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.

The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.

Copyright 2022 FMG Suite.

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