Broker Check


| May 02, 2022


On Friday, a sharp sell-off sent major stock market indices into negative territory

for the week, capping a volatile close to April. The Dow Jones Industrial Average

declined 2.47%, while the Standard & Poor’s 500 tumbled 3.27%. The Nasdaq

Composite index dropped 3.93% for the week. The MSCI EAFE index, which tracks

developed overseas stock markets, fell 3.33%.


Trading was volatile in the final week of April as investors struggled with the

crosscurrents of global economic growth anxieties stemming from widening

COVID-related lockdowns in China and a fresh batch of corporate earnings reports.

Monday set the tone for the week. Stocks staged an intraday reversal, wiping out a

deep morning decline to end the day higher. After broad losses on Tuesday and a

choppy session on Wednesday, stocks mounted a powerful rally Thursday thanks to

positive corporate earnings reports, overcoming a disappointing first-quarter Gross

Domestic Product report. Stocks could not sustain Thursday’s momentum, as

Friday witnessed a broad-based retreat to cement another week of losses.


Following the torrid 6.9% annualized GDP growth rate in the fourth quarter,

economists had expected economic growth to moderate to about a one-percent gain

in the first quarter. Instead, the economy shrank at an annualized rate of 1.4%,

dented by a slowdown in inventory investment by businesses, a jump in the trade

deficit, and a decline in defense spending. Consumer spending held up, rising 2.7%,

though the gain was amid higher prices. Some economists expect the economy to

resume its expansion for the remainder of the year, which may be one reason

investors shrugged off the negative surprise.


Monday: Institute for Supply Management (ISM) Manufacturing Index.

Tuesday: Factory Orders. Job Openings and Turnover Survey (JOLTS).

Wednesday: Federal Open Market Committee (FOMC) Announcement. Automated

Data Processing (ADP) Employment Report. Institute for Supply Management

(ISM) Services Index.

Thursday: Jobless Claims. 

Friday: Employment Situation.


Tuesday: Advanced Micro Devices, Inc. (AMD), Pfizer, Inc. (PFE), Starbucks

Corporation (SBUX), Marathon Petroleum Corporation (MPC), Skyworks

Solutions, Inc. (SWKS), Prudential Financial, Inc. (PRU).

Wednesday: CVS Health Corporation (CVS), Twilio, Inc. (TWLO), Fortinet, Inc.

(FTNT), eBay, Inc. (EBAY), Booking Holdings, Inc. (BKNG), Match Group, Inc.


Thursday: Block, Inc. (SQ), Illumina, Inc. (ILMN), Shopify, Inc. (SHOP), Pioneer

Natural Resources Company (PXD), ConocoPhillips (COP), AnheuserBusch InBev

(BUD), Albemarle Corporation (ALB), Vertex Pharmaceuticals, Inc. (VRTX),

Kellogg Company (K), Air Products and Chemicals (APD).


Investor sentiment is a multi-decade lows.  Historically, this has been a good

contrarian indicator of better things to come 6-12 months out.  Warren Buffet,

chairman of Berkshire Hathaway, has invested around $50 billion of the $150

billion in cash the company was holding in just the last few months.  A famous quote

of his is “When others are greedy be nervous, and when others are nervous be

greedy.”  Obviously, with billions and billion of dollars, he can afford to be

patient.  However, the same principle applies to most all investors.  Panic selling has

never been a profitable endeavor.  

I will agree the market is frustratingly painful the past few months.  There are

various headwinds for the market.  Many of those headwinds are priced in and

negative sentiment can push the market to the extreme.  I would not venture to pick

where the market might bottom, but I also know panic selling could push things a

bit lower from here.  While painful in the short term, a flush out is a good sign for

longer term investors.

If your situation has changed, please let us know.  Otherwise know we are closely

monitoring the markets and will make adjustments as needed to maintain our long

term goals, but won’t have knee jerk reactions either.  The Fed meeting on

Wednesday is likely to move markets in one direction or another depending upon

the commentary.  Stay tuned.

Have a good week!