First Quarter 2022 Review

Stocks started the new year on a volatile note. Persistent inflationary pressures amidst a strong jobs recovery have pushed the Federal Reserve to adopt a more hawkish monetary policy stance, and Russia’s needless war continues to disrupt commodity markets while weighing heavily on sentiment. U.S. and global stocks spent the first half of Q1 pricing-in these variables—from January 1 to the invasion on February 24, the S&P 500 declined -11.3%.

Investors are weighing a laundry list of unknowns in the current environment—how quickly the Fed will raise rates, whether and when inflation will moderate, how long Russia’s war will continue, whether the war escalates and turns global, and whether the pandemic is truly over. Our base assumption is that equity market volatility will continue as these questions continue to weigh on sentiment.