Market Wrap: Will Monday Give Us the Reset We Need, or is There a Bout of Volatility Coming?

Stocks Mixed at the Close Of a Rollercoaster Week

Here’s what you need to know:

• The Dow Jones Industrial Average declined 2.8%, the S&P 500 lost 3.3%, and the Nasdaq Composite fell 3.6% last week.
• Tech stocks led the decline, with the Nasdaq 100 losing 4.1%.
• The CBOE Volatility Index (VIX), a measure of market volatility, rose to its highest level since June.

Tech Stocks Underperform Amid Growth Worries

Technology stocks were among the worst performers last week, with the Nasdaq 100 losing 4.1%. Concerns about slowing growth in the tech sector weighed on sentiment, as investors worried about the impact of rising interest rates and inflation on tech companies' earnings.

Several high-profile tech stocks reported disappointing earnings last week, including Netflix, Snap, and Shopify. Netflix lost 35% of its value after reporting a loss of subscribers for the first time in a decade. Snap and Shopify also reported disappointing results, with both companies citing macroeconomic headwinds as a factor.

Rising Interest Rates and Inflation Weigh on Sentiment

Rising interest rates and inflation are also weighing on sentiment in the stock market. The Federal Reserve has raised interest rates three times this year, and it is expected to continue raising rates in the coming months.

Higher interest rates make it more expensive for companies to borrow money, which can slow down economic growth. Inflation is also eroding corporate profits, as companies are forced to pay more for raw materials and labor.

Volatility Expected to Remain Elevated

The CBOE Volatility Index (VIX), a measure of market volatility, rose to its highest level since June last week. This suggests that investors are expecting more volatility in the coming weeks.

There are several factors that could contribute to continued volatility in the stock market. The war in Ukraine is ongoing, and there is uncertainty about how it will impact the global economy. The Federal Reserve is also expected to continue raising interest rates, which could slow down economic growth.

What to Watch This Week

There are several key events to watch this week that could impact the stock market.

• The release of the Consumer Price Index (CPI) on Wednesday, which will provide the latest data on inflation.
• The release of the Federal Reserve's Beige Book on Wednesday, which will provide the latest insights into economic conditions.
• The start of the first-quarter earnings season, with several major companies reporting earnings this week.

Conclusion

The stock market is coming off a rollercoaster week, and it is unclear whether Monday will give us the reset we need or if there is a bout of volatility coming.

Several factors are weighing on sentiment, including concerns about slowing growth in the tech sector, rising interest rates, and inflation. The war in Ukraine is also adding to uncertainty.

Investors should be prepared for continued volatility in the coming weeks. The release of key economic data and the start of the earnings season could provide further direction for the market.