To The Moon

As war broke out between Russia and Ukraine, the week ended up modestly positive overall for the S&P 500 and the NASDAQ, with the Dow essentially flat. The S&P 500 on Tuesday began with a 1% decline which pushed the index into a correction, as it was down more than 10% from a record high it reached on January 3. It was the first correction for the S&P 500 since the pandemic began. The NASDAQ preceded the S&P 500 in correction territory by about five weeks. Weekly Index Returns from Last WeekOther Markets: The price of U.S. crude oil briefly topped $100 per barrel on Thursday morning—the first time that threshold has been reached since 2014. The spike came in the hours after the Russia-Ukraine war broke out. Spot gold prices hit $1,955 per ounce Feb. 24, their highest level in over a year, which is commonly viewed as a safe-harbor commodity during times of market volatility and uncertainty. VIX, A gauge of investors’ expectations of short-term stock volatility soared about 22% on Thursday morning to the highest level in a month. A Russian equity index tumbled 33% on Thursday but climbed about 19% the next day. The ruble shed about 8% on Thursday before gaining around 3% on Friday. Macro Markets: Market affordability: A down day for U.S. stocks on Wednesday sent the S&P 500’s forward price-to-earnings ratio to 18.5—below its five-year average for the first time since April 2020, according to FactSet. High inflation persists: A measure of inflation that the U.S. Federal Reserve uses to help set monetary policy climbed at the highest monthly rate since 1983. The government on Friday said core personal consumption expenditures price index rose at an annual rate of 5.2% in January. The same report showed that consumer spending rose 2.1%. Jobs ahead: In January, the economy generated 467,000 jobs—well above economists’ consensus forecast— and upward revisions to job totals in late 2021 provided a further indication of the labor market’s resilience despite the Omicron variant. S&P 500 11 Sectors Performances: Last week, Utilities, Healthcare, and Real Estate Sectors increased more than 1%, the Consumer Cyclical sector dropped 3.3% in total. Inside Utilities Sectors, $NextEra(NEE)$$Duke(DUK)$$Southern(SO)$$American Electric Power(AEP)$ $Exelon(EXC)$ $Dominion Resources(D)$$Surfstitch Group Ltd(SRF.AU)$$Public Service Enterprise Group Inc(PEG)$$FirstEnergy(FE)$$DTE Energy Co(DTE)$, $Ameren(AEE)$, $Atmos(ATO)$,$American Water(AWK)$all see positive increases. Inside Healthcare Sector, $(ABT)$ rose 4.81%, $(TMO)$ rose 2.36%, $(DUR)$ rose 4.62%, $(JNJ)$ rose 1.62%, $(ABBV)$ rose 3.83%,$( AMGN)$ Rose 2.84%,$( CVS)$ Rose 2.12%. Currently, the war has jumped out, How will this event affect the market ? The full effect of the sanctions and of the conflict itself on markets is still unknown in this confusing and destructive time. But here are some things investors should know about how markets tend to react to war and armed conflict: Stocks That Can Benefit From Armed Conflict Not surprisingly, leading defense stocks have performed relatively well so far in 2022. Shares of military electronics technology company L3Harris Technologies Inc. (LHX), Shares of defense contractor Northrop Grumman ($(NOC)$), the stock prices of defense giants Lockheed Martin Corp. ($(LMT)$) and Raytheon Technologies Corp. ($(RTX)$) were perform well each while the S&P 500 has slumped. In addition to defense stocks, rising energy prices around the world have been a tail wind for the energy sector. In fact, 11 of the 12 best-performing stocks in the S&P 500 so far in 2022 are oil and gas stocks. Top performers include oil services companies Halliburton Co. ($(HAL)$) and Schlumberger Ltd. ($(SLB)$) and oil and gas exploration and production company Occidental Petroleum Corp. ($(OXY)$). All three stocks are up more than 30% so far this year. Stocks That Fall in Times of Conflict Last week Travel and leisure stocks(Consumer Cyclic sectors) were among the worst performers in the S&P 500, including online travel stock Expedia Group Inc. ($( EXP)$E), casino operator Las Vegas Sands Corp. ($(LVS)$) and airline stock United Airlines Holdings Inc. ($(UAL)$). In addition, bank stocks also took a big hit on the Ukraine news. Some experts speculate that the uncertainty of the Ukraine conflict coupled with the stock market volatility it has triggered will force the FED to be more conservative in raising interest rates to combat inflation. Bank stocks that benefit from higher interest rates, including Fifth Third Bancorp ($(FITB)$), Signature Bank ($(SBNY)$) and Wells Fargo & Co. ($(WFC)$) were among the worst performers in the S&P 500 on Thursday morning. How War Affects Commodity Prices The rally in energy sector stocks has been driven in large part by rising crude oil prices. Russia is one of the largest oil producers in the world, and global oil supplies could be disrupted if NATO targets Russia with significant oil sanctions." Oil prices are a problem, as they act like a tax and will certainly have an impact on economic growth, especially if financial conditions tighten further," says Cliff Hodge, chief investment officer for Cornerstone Wealth. How War Affects Cryptocurrency Prices In reality, Bitcoin prices have been highly correlated with stock prices in recent months. Some crypto investors have said Bitcoin's limited supply makes it like digital gold and have argued that crypto should be a safe-harbor investment and a hedge against inflation. Nigel Green, chief executive and founder of deVere Group, says the market is treating Bitcoin more as a risk asset than a safe harbor, " we might see it revert to being regarded as a safe haven asset as the situation in Ukraine develops. Stock Market Outlook If history is any indication, the Russia-Ukraine sell-off may prove to be short-lived. From a market perspective, most geopolitical events are sharp but short-lived, with volatility creating opportunity. In fact, since 1941, the S&P 500 has averaged a total drawdown of 5% following 21 major geopolitical events, including the Pearl Harbor attack, the assassination of President John F. Kennedy and the September 11 terrorist attacks. Despite the initial market volatility, the S&P 500 has subsequently taken an average of only 45 days to fully recover those initial losses. Bill Adams, chief economist for Comerica Bank, says "Even with new growth headwinds, the U.S. economy should still grow solidly in 2022 with real GDP of over 3%, U.S. growth this year should be supported by less drag from the pandemic and consumers dipping into the $2+ trillion in savings they accumulated since the start of the pandemic – these factors will likely matter more for the U.S. economy than the Russia-Ukraine conflict." Most Anticipated Earnings Releases: February 28- March 4