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Monday Market Musings>>> Panic Among American Investors

Updated: Feb 22


Picture Credit: Nick Chong


“The market just feels like it wants to go down” says David Coombs, head of multi-asset investments at Rathbones. Despite most of the results from 2021, investors are currently a nervous wreck so far, stressing about inflation, the federal reserve and the potential Russian invasion of Ukraine that could disrupt energy supplies.


The stock market finally succumbed to the fall that many have been forecasting throughout the latter part of 2021. The S&P 500 flirted with the market correction, falling at one point as far as 98% from a prior all-time high.


Earning growth for S&P 500 companies is tracking at 28% for the last quarter of 2021 compared tp the same period in 2020. This year, S&P 500 reached into the yearn at an all time high in January, and limped into February down 5.3%.


“We’re in the process of a regime change, we’ve been in a low-interest rate environment and that’s changing. With higher interest rates comes volatility and some pressure on valuation levels.”, says Terry Sandven, Chief Equity Strategist at U.S. Bank of Wealth Management.


Investors have largely brushed off recent gains and are instead hatching onto the uncertainty about the future. “We’re strapped in for another two or three months – right through to next earnings season, to be honest” says David Coombs.


The Inflation ran rampant in January. Consumer prices, as measured by the Consumer Price Index, rose 7.5% in consecutive years. This is the fastest increase in the last four decades. Producer price index has also increased by 9.7%.


Picture Credit: Scott Graham

David Bianco, D.W.S Chief investment officer for the Americas, said his biggest concern, at present, with the earning season finishing up, is whether a sell-off in government bonds will gather steam, disrupting the broader market. “What I’m really fearful of is the bond market losing confidence in the fed’s ability to tame inflation and bring it down over a reasonable amount of time” said Bianco.


Professional investors will most likely spend much of February looking ahead into March, rather than trying to benefit from all the short-term unknown factors surrounding the inflation and rate hitches. So far, experts say that the first half of the year will be volatile.


February 21st 2022 | 9:00 PM

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