Welcome back to the Monthly Market Wrap from YCharts, where we break down the most important market trends for advisors and their clients every month. As always, feel free to download and share any visuals with clients and colleagues, or on social media.
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Equities continued to slide lower, with the S&P 500 falling 3% and the Nasdaq 3.4%. Once again, Energy was the only positive sector in February, adding another 7.1% to last month’s 18.8% surge. Interest rate-sensitive sectors such as Communication Services, Technology, and Real Estate took the worst hits in February.
Treasury rates got a big boost in February as investors fled to safety, largely due to uncertainty caused by the Russian invasion of Ukraine. T-Bills (1-Month Treasury Rate) doubled from 0.03% to 0.06%, while the 2-Year gained 26 basis points, the most of any US treasury rate, up from1.52% to 1.79%. Federal Reserve officials also signaled a March rate hike is still the plan. Around the world, the yields of both Canada’s and Italy’s long-term bonds surpassed the US 10-Year, while Germany’s long-term rate re-entered positive territory.
The old saying, “what goes up must come down,” is generally (and hopefully) not true for long-term investors. While the overall market has an established track record of gaining value over time, individual stocks can and do get caught up in short-term trends and bubbles. In times like these, the adage rings annoyingly true.
If you invested in Moderna (MRNA) at the end of November 2020, when COVID-19 vaccines were first being rolled out, your investment grew by 217.2% at its peak. If you checked back at the end of February, however, you’d see that your former 20-bagger is barely breaking even. Similarly, an investment into the fourth-largest company in the world, Amazon (AMZN), would have risen 17.8% only to end February 2022 in the red by 3%.
Though the S&P 500 has risen steadily over the past 15 months, the same can’t be said for some of the COVID-era’s biggest names. Sometimes what goes up does in fact come right back down, and reminds us of the risks and rewards of timing the market.
Major averages were down again in February, with growth stocks leading the declines. The iShares Russell 1000 Growth ETF (IWF) sank 4.2% in February, while its value counterpart (IWD) fell only 1.2%. Though value has outperformed growth by 2.3 percentage points over the trailing twelve months, 2022 is responsible for wiping out a significant amount of those gains from the board. Year to date, value has fallen 3.5%, and growth has tumbled 12.5%.
The price of Gold in USD was $1,884.80 per ounce at February’s end, representing a monthly price increase of 5%. Investors fled from risky assets and piled into gold, sending the SPDR Gold Shares ETF (GLD) up 6.1% and the VanEck Gold Miners ETF (GDX) 13.7% higher.
Oil prices continued their rapid climb in February. As of February 28th, the WTI Daily Spot Price was $96.13 per barrel, and Brent surpassed $100, sitting at $103.08/barrel.