Weekly Recap | February 7, 2022

January 31 - February 4, 2022 Recap

Stocks Advance Second Week

Equities Have Best Week Since Christmas
All three major U.S. equity indices posted their first back-to-back weekly gains of the new year. Gains were backed by continued strength in fourth quarter earnings and significantly stronger-than-expected January payroll gains reported on Friday. Bond yields surged along with crude oil futures.

For the Week…
The S&P 500 gained 1.57%, the Dow Jones Industrial Average rose 1.05% and the tech-heavy Nasdaq Composite surged 2.41%.

Payrolls Surge in January
U.S. nonfarm payrolls surged by 467,000 in January, widely surpassing projections for 150,000. Moreover, payrolls were revised higher by a whopping 709,000 for the prior two months (December +311K, November +398K) due to annual adjustments by the BLS. The BLS revisions brought the tally of 2021 hiring to 6.665 million, the strongest single-year gain in U.S. history. The unemployment rate edged higher to 4.0% in January.

Energy Retains 2022 Leadership
Eight of the 11 major sector groups finished with gains last week, led by Energy (+4.98%), Consumer Discretionary (+3.95%) and Financials (+3.57%). Industrials (+0.43%) and Consumer Staples (+0.42%) climbed the least. Communication Services (-0.25%), Real Estate (-0.21%) and Materials (-0.20%) declined. Energy (+24.49%) is up the most YTD.

Treasury Yields Jump
Backed by the strong jobs report, both short- and long-term Treasury yields advanced last week with the benchmark 10-year Treasury yield coming in range of 2%. On Friday, the yield on two-year notes climbed just over 0.13% (+13 basis points) to 1.320% for its largest daily increase in nearly two years. For the week, the yield on benchmark 10-year notes advanced 0.145% (+14.5 basis points) ending Friday at 1.922%. After surging 1.7% the week prior, the U.S. Dollar Index plunged 1.84% last week, its largest weekly pullback since March 27, 2020. U.S. WTI crude oil surged 6.3% last week, ending Friday at $92.31/barrel.

The Latest from @CeteraIM

Recovery Indicators Improve

Bond Yields Ramp Higher

Long Term Unemployment Shrinks

Economic Calendar

Monday, February 7
Consumer Credit.

Tuesday, February 8
Small Business Optimism, U.S. Trade Deficit.

Wednesday, February 9
Mortgage Activity, Wholesale Trade Sales, Inventories (final Dec).

Thursday, February 10
Jobless Claims, Consumer Prices, Federal Budget.

Friday, February 11
Consumer Sentiment.

The unemployment rate increased slightly to 4.0% in January from 3.9% in December, largely because more people are reentering the labor force. The labor force participation rate climbed to a pandemic high of 62.2% last month. For context, the pre-pandemic peak was 63.4%. Overall, the January jobs report was strong, with a reported increase in nonfarm payrolls of 467,000.

^{This report is created by Cetera Investment Management LLC. For more insights and information from the team, follow @CeteraIM on Twitter.}

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^{No independent analysis has been performed and the material should not be construed as investment advice. Investment decisions should not be based on this material since the information contained here is a singular update, and prudent investment decisions require the analysis of a much broader collection of facts and context. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The opinions expressed are as of the date published and may change without notice. Any forward-looking statements are based on assumptions, may not materialize, and are subject to revision.}

^{All economic and performance information is historical and not indicative of future results. Investors cannot directly invest in unmanaged indices. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability, and differences in accounting standards.}

^Glossary

^{The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ.}

^{The S&P 500 is an index of 500 stocks chosen for market size, liquidity and industry grouping (among other factors) designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe.}

^{The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad based index.}

^{The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe and is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.}

^{The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.}

^{The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe and is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership.}

^{The Bloomberg Barclays US Aggregate Bond Index, which was originally called the Lehman Aggregate Bond Index, is a broad based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government–related and corporate debt securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency) debt securities that are rated at least Baa3 by Moody’s and BBB- by S&P. Taxable municipals, including Build America bonds and a small amount of foreign bonds traded in U.S. markets are also included. Eligible bonds must have at least one year until final maturity, but in practice the index holdings have a fluctuating average life of around 8.25 years.}

^{The Bloomberg Barclays US Corporate High Yield Index measures the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt. Payment-in-kind and bonds with predetermined step-up coupon provisions are also included. Eligible securities must have at least one year until final maturity, but in practice the index holdings has a fluctuating average life of around 6.3 years.}

^{The Bloomberg Barclays US Municipal Bond Index covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds. Eligible securities must be rated investment grade (Baa3/BBB- or higher) by Moody’s and S&P and have at least one year until final maturity.}

^{The MSCI EAFE Index is designed to measure the equity market performance of developed markets (Europe, Australasia, Far East) excluding the U.S. and Canada. The Index is market-capitalization weighted.}

^{The MSCI Emerging Markets Index is designed to measure equity market performance in global emerging markets. It is a float-adjusted market capitalization index.}

^{The Bloomberg Commodity Index is a broadly diversified index that measures 22 exchange-traded futures on physical commodities in five groups (energy, agriculture, industrial metals, precious metals, and livestock), which are weighted to account for economic significance and market liquidity. No single commodity can comprise less than 2% or more than 15% of the index; and no group can represent more than 33% of the index.}

^{The S&P GSCI Crude Oil Index is a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market.}

^{The S&P GSCI Gold Index, a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark tracking the COMEX gold futures market.}

^{The U.S. Dollar Index is a weighted geometric mean that provides a value measure of the United States dollar relative to a basket of major foreign currencies. The index, often carrying a USDX or DXY moniker, started in March 1973, beginning with a value of the U.S. Dollar Index at 100.000.}