Capital Markets

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May 5, 2022

Interim Capital Market Update

April was rough and market volatility continues in May.

On Wednesday May 4, 2022, the Fed raised the Fed Funds rate by 50 basis points, the largest move since 2000.  The market had been anticipating this move for some time as the Fed is working incredibly hard to communicate with investors to orchestrate a soft landing.  Initial reaction from market participants was that the Fed is less hawkish (less aggressive in raising interest rates) than feared.  As a result, the markets staged a relief rally of almost 3% that afternoon.   The following day, fear came back into the markets leading to a sharp reversal that more than erased the previous day’s gains.

It’s been a long time since we’ve seen this sort of market environment. Both small cap stocks (Russell 2000) and the Nasdaq (dominated by large cap technology stocks) entered bear market territory in 1Q22. So, what is going on?  Click here to read a thoughtful analysis by Scott Thompson, your Chief Investment Advisor.