Investment Outlook

Highlights from the week of May 6 – May 12, 2022.

Volatility pummeled stock prices as U.S. markets fell for a sixth straight week. Investors struggled with the Fed-led hawkish shift of global monetary policy, persistently high inflation and macroeconomic overhangs from China’s Covid lockdowns.

As investors grapple with a new era of macroeconomic uncertainty, liquidity is king in the near term.

In an extremely volatile week, U.S. stocks ultimately retreated, as investors digested comments from the Federal Reserve and reacted to the possibility of slower economic growth as a result of the Fed’s shift towards more hawkish monetary policy.

Global stocks lurched lower for the fourth straight week, ending a brutal month marked by concerns of rising interest rates and increasing headwinds from supply disruptions, China’s Covid lockdowns and the Russia–Ukraine war.

U.S. stocks retreated, and volatility intensified, as investors digested 1Q22 earnings reports and braced for tighter monetary policy. The global growth outlook weakened on slowdown in China and inflation aggravated by the war in Ukraine.

Knowing the stakes, the Fed is likely to keep surprises to a minimum.

Global stock markets declined, weighed down by the war in Ukraine, inflation, imminent quantitative tightening and forecasts of economic slowdown. 

Despite our view that a U.S. economic contraction is avoidable in the near term, the outlook for equities has deteriorated since the beginning of the year and we think this sour spot is likely to last as monetary policy becomes tighter.

The major U.S. stock indexes fell for the week and bonds extended their selloff. Market sentiment wavered on continuing uncertainty about the war in Ukraine, surging commodity prices, rising bond yields and first-quarter earnings.