Take a look at last week’s market recap from Joe Gallemore, CIMA® Partner & Director of Investment Management for Argent Bridge Advisors. Watch the video now!
Stocks finished 2021 with most indexes posting handsome gains.
- US Large Cap was the top performer among the broad indexes, while Energy, Real Estate, and Financials were the best performing sectors.
- One detail to be aware of is that US Large Cap indexes have become concentrated in the biggest names. The ten largest stocks in the S&P 500 now comprise over 30%, and their valuations can be considered expensive. This is illustrated by the fact that an index comprised of the biggest 50 companies within the S&P 500 outperformed the broader index in 2021. So, diversification may offer opportunity looking forward.
- Emerging Markets stocks struggled because of the asset class’s inextricable connection to China, which experienced a market correction intertwined with a government crackdown on the tech sector during the year.
- Commodities had a great year mainly due to a surge in energy prices and also benefit from the tailwind of inflation.
Turning the page to 2022, stock stumbled out of the gate.
- It seems the reason for this was comments from the Federal Reserve implying a more aggressive policy on raising interest rates in the future.
- But not all asset classes reacted badly. International and emerging markets stocks held relatively steady, as both of those areas will benefit from tighter policies on the US dollar. And value stocks actually moved positive because that style contains sectors like financials and healthcare which can actually benefit from rising interest rates and weather periods of more modest economic growth.