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Market Strategy 3/21/2022

  • John Stoltzfus
  • March 21, 2022

Let the Sunshine In

Rising interest rates, volatile commodity prices and Russia’s attack on Ukraine remain overhanging risks

Key Takeaways

  • This week investors will look to see if last week’s rally will hold through economic and geopolitical news flow.
  • Last week saw bond prices fall and yields rise with stocks finding traction to rally powerfully in the US as sentiment improved on lower valuations, economic data, and reports.
  • Major stateside equity benchmarks now stand higher from the date of the Russian incursion into Ukraine. This suggests that projections of the impact on the US from the hostilities in Eastern Europe have been overblown.
  • Mixed economic data reported last week showed consumer sentiment and spending moving lower even as the Conference Board’s Leading Indicator moved higher. 
global abstract

Traders, investors and market observers will be watching how stocks perform this week after equities stateside experienced powerful rallies last week. It wasn’t so much that risk had subsided at the economic or geopolitical level but rather that stocks showed solid resilience and a strong enough bias for upside gains to see the S&P 500 and the Nasdaq 100 indices deliver their best rallies since November 2020 notwithstanding the challenges that have emerged to steepen the proverbial wall of worry for stocks to climb since the start of the year.

In our view it wasn’t so much that investor sentiment had turned broadly positive last week but rather that enough investors to make a difference started to see numerous positives among economic data points and corporate management commentaries and actions to offset a deluge of worries that have dogged the markets since early this year.

Consider that last week the Dow Jones Industrial Average, the S&P 500, the S&P 400 (mid-caps), the S&P 600 (Small Caps), the Russell 2000 (small caps) and the NASDAQ Composite respectively rallied 5.5%, 6.16%, 5.25%, 4.20%, 5.38% and 8.18% notwithstanding that Fed policy, inflation worries and the Russian incursion into Ukraine remained prominent as news items and high priority concerns in conversations among the denizens of Wall Street.

Quotation from Aenean Pretium

Global conditions support our overweight on US equities over foreign equities for now.

It’s also worth noting that the aforementioned indices as of last Friday stood 4.61%, 4.07%, 4.52%, 4.41%, 4.52% and 3.12% higher from February 24—the start date of the Russian incursion into Ukraine, suggesting that some change in sentiment flowed through the markets stateside last week related to projections of impact on the US and other economies around the globe from the rise in hostilities in Eastern Europe.

Among the broadest and widely followed international equity indices MSCI EAFE (developed international markets ex-US and Canada), MSCI Emerging markets and MSCI Frontier Markets posted gains that were in aggregate not quite as robust as those stateside but still reflected positive on the week ending last Friday with respective gains of 5.52%, 3.44% and 0.66% evidently gaining some positive investor attention.

However, the same international indices have not fared as well as their US counterparts in performance since the outbreak of hostilities with MSCI EAFE up 2.31% against respective declines of 2.76% and 2.01% for MSCI Emerging markets and the MSCI Frontier markets benchmarks.

It’s All about That Gas

We’d venture that the dependency of Europe and Emerging European countries on Russian gas and other commodities from Russia as well as the effects of US and its allies’ sanctions against Russia (along with the relative strength of the dollar) all contributed to the relative weakness of the international equity benchmarks over the course of the last week and since the start of the Russian incursion into Ukraine. Global conditions support our overweight on US equities over foreign equities for now.

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John Stoltzfus


Chief Investment Strategist, Oppenheimer Asset Management Inc.

John is one of the most popular faces around Oppenheimer: our clients have come to rely on his market recaps for timely analysis and a confident viewpoint on the road forward. He frequently lends his expertise to CNBC, Bloomberg, Fox Business, and other notable networks.

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