34%
Halliburton (HAL): The oil-field services company rallied as investors shifted into energy stocks. It also reported better-than-expected results and received upgrades from Morgan Stanley and J.P. Morgan.
Big Movers in January 2022
22%
Schlumberger (SLB): The oil-field service provider surged past Wall Street’s profit and revenue estimates in the fourth quarter. CEO Olivier Le Peuch plans to increase capital spending more than 10% because “industry macro fundamentals are very favorable.” He expects more investment as demand recovers from the coronavirus pandemic.
19%
Discovery (DISCK): The media company advanced as investors focused on its merger with AT&T’s (T) WarnerMedia, expected for the second quarter. The rebound followed a sharp drop in 2021 as analysts viewed the company as a value opportunity and a potential competitor for Netflix (NFLX) and Walt Disney (DIS).
33%
Moderna (MRNA): The maker of coronavirus vaccines was the biggest decliner in the S&P 500 for the second straight month. Investors continued selling the stock despite incrementally positive regulatory news, looking for the coronavirus pandemic to wind down.
29%
Netflix (NFLX): The streaming-video giant forecast an unexpected slowdown in subscriber growth, and missed its own guidance in the fourth quarter. At one point the stock was down 50% from its record high, erasing all of its pandemic-fueled gains.
26%
Etsy (ETSY): The e-commerce stock continued a slide that began in December as investors unloaded high-multiple growth companies. At one point, ETSY had rallied more than 900% from its March 2020 low. It’s now given back more than 60% of that gain.
Key Economic Events Last Month
 | Jobs | Payroll reports from the Labor Department (7/1) and ADP (5/1) were mixed, with rebounds in the private sector and weakness in government hiring. A tight job market lifted wages more than expected and pushed unemployment below forecasts. |
|---|---|---|
 | Fed Hints at Rate Hike in March | The Federal Reserve indicated it will start raising interest rates and cease asset purchases in March. Chairman Jerome Powell conceded that inflation “has probably gotten a bit worse” amid “solid job gains.” Policymakers also released plans for “significantly reducing” the central bank’s balance sheet. (26/1) |
 | GDP Beats Estimates | Gross domestic product increased by 6.9% in the fourth quarter, according to the government’s preliminary estimate. It was more than a full percentage point ahead of forecasts as companies rebuilt inventories depleted during the pandemic. The 5.7% annual growth for 2021 was the best since 1984. (27/1) |
| Housing | Housing starts and building permits for December (19/1) and new-home sales (26/1) beat estimates. An ongoing inventory shortage, along with low interest rates, continued to support the housing market. Prices rose 19% year-over-year. Some industry observers believe expectations of higher interest rates pulled forward demand from would-be buyers. |
Key Futures Contracts
| Product Name | Current Month | Expiration | Next Month | 1-Mon% |
|---|---|---|---|---|
| S&P 500 E-Mini (@ES) | ESH22(March) | 18 Mar 22 | ESM22(June) | -5.3% |
| *S&P 500 E-Mini Micro (@MES) | MESH22 (March) | 18 Mar 22 | MESM22 (June) | -5.3% |
| Nasdaq-100 E-Mini (@NQ) | NQH22 (March) | 18 Mar 22 | NQM22 (June) | -8.8% |
| *Nasdaq-100 E-Mini Micro (@MNQ) | MNQH22 (March) | 18 Mar 22 | MNQM22 (June) | -8.8% |
| Dow Jones E-Mini (@YM) | YMH22 (March) | 18 Mar 22 | YMM22 (June) | -3.3% |
| *Dow Jones E-Mini Micro (@MYM) | MYMH22 (March) | 18 Mar 22 | MYMM22 (June) | -3.3% |
* Micro contracts are one-tenth the size of standard e-minis.
Events to Watch This Month
| Date | Event | What to watch |
|---|---|---|
| Fri, 4-Feb | Non-farm Payrolls | Wages, labor-force participation |
| Thu, 10-Feb | Consumer Price Index (CPI) | Is inflation too hot or does it moderate? |
| Wed, 16-Feb | Federal Reserve Minutes | Details on rate-hike pace and/or inflation outlook |
| Tue, 22-Feb | Consumer confidence | Impact of inflation, rate hikes on spending plans |
| Thu, 24-Feb | Gross Domestic Product (GDP) | Changes to the preliminary number on 27 -Jan |
Sector Watch
Energy19%
Financials0%
Consumer Staples0%
Utilities0%
Industrials0%
Communications0%
S&P 5000%
Materials0%
Technology0%
Health Care0%
Real Estate0%
Consumer Discretionary0%
Energy stocks broke out to new multiyear highs as crude oil rallied. There was also evidence of investors rotating from growth stocks to lower-multiple energy names.
Financial stocks held their ground thanks to their lower valuations and potential to benefit from a strong economy.
Consumer discretionaries performed the worst as investors rotated away from e-commerce names that benefited from the pandemic. Rising interest rates also weighed on housing stocks.
Health Care stocks dropped following a 9% surge in December. They also struggled with investors favoring cyclical sectors like energy and financials.
Noteworthy Calls & Predictions
10-January
Jamie Dimon: U.S. is headed for best economic growth in decades thanks to strong household balance sheets. Federal Reserve will hike rates more than four times. Dimon is CEO of JPMorgan Chase (JPM).
Economy
12-January
CNBC: Expectations of rising rates may be pulling home purchases forward, according to some realtors. Separately, Redfin said that 60% of home purchases in December faced bidding wars.
Economy
18-January
Gene Munster of Loup: Microsoft (MSFT) is headed for “collision course” with antitrust regulators over Activision Blizzard (ATVI) acquisition, but will likely prevail over the longer run.
Technology
19-January
American Association of Individual Investors: Weekly poll of retail investors shows lowest bullish sentiment (21%) since July 2020. Bearish reading of 47% was the highest since September 2020. AAII’s survey is sometimes viewed as a contrary indicator.
S&P 500
20-January
Jeremy Grantham of GMO: Super-bubble is deflating as speculative growth stocks tumble amid irrational investor behavior. Overall decline of 45% in key benchmarks is possible.
S&P 500
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