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“Times and conditions change so rapidly that we must keep our aim constantly focused on the future.” – Walt Disney
There are less than ten trading days left in 2021, but investors don’t appear to be in a positive mood to close out the year. Futures are kicking off the week on a down note again as all of the major averages are indicated to open down by 1% or more. Commodities are lower, the 10-year yield is lower, and international markets are under even more pressure than US stocks. The surge of the Omicron variant has really started to impact activity in regions where the numbers are rising as consumers stay home. While no one is expecting a return to the situation of Spring 2020, this time around the easy fiscal and monetary conditions that helped to grease the skids in the past aren’t around now.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
It’s not often that the S&P 500 drops more than 2% during a week but four out of eleven sectors actually finished the week 1% higher. That was the case last week, though, as the sheer size of Technology and Consumer Discretionary and their declines of more than 4% dragged the entire market lower. These two sectors weren’t even the worst performers as Energy’s plunge had a five-handle on it! On the upside, Health Care, Real Estate, Consumer Staples, and Utilities all rose more than 1%, but because of their relatively low weights in the S&P 500 (besides Health Care), it wasn’t enough to stem the drag of Tech and Consumer Discretionary.
Even after their respective declines last week, Technology and Consumer Discretionary are still both up more than 20% YTD while Energy’s gain is close to 50%. Concerns over the Omicron variant, a tighter Fed, and fiscal and monetary drags in 2022 have been the primary drivers weighing on investor sentiment, and the fact that many investors are sitting on enormous gains has them only more willing to take some profits.
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