1ST QUARTER EQUITIES
Equity Market: The stock market saw its worst quarter in two years: since the spring of 2020 when Covid first emerged. The market was highly troubled in January and February. Inflation exceeded 6%, the highest in 40 years, and the Federal Reserve announced its intention to raise interest rates by as high as 2% over the course of 2022. The war in Ukraine also loomed. The S&P 500 dipped over 13% from its highpoint and the Nasdaq Composite was temporarily in the bear market territory of a 20% decline.
Stocks did make a comeback in March as investors adjusted to the challenges ahead. Some were reassured actually by the Fed’s determination to fight inflation. The S&P 500 ended the quarter with a decline of 4.6%. The Dow Jones Composite Average was off 1.69%. The Russell 2000 was down 7.5% The worst performer was the Nasdaq Composite which was down 8.95%.
Preferred Equities: As always, despite market conditions, we look for long-term equity opportunities. Our focus is on companies that can weather both the short-term period and flourish in a longer time frame. We want fundamentally sound companies with reasonable valuations and that pay dividends. In that context, similar to last quarter, we are looking at these sectors:
HEALTH CARE: This sector has interesting opportunities in biotechnology and in the variety of new treatments and devices being developed for the aging population.
INDUSTRIALS/MATERIALS: The legislation to promote infrastructure investments, as it rolls out, should create opportunity for many companies in this sector.
TECHNOLOGY: We are interested in selective technology companies with emphasis on innovation. These companies can provide “juice” opportunity for a portion of client portfolios.
ENERGY: This sector has opportunities worth exploring in the electric companies that will be modernizing their power grids, and in some of the new alternative energies.
CONSUMER STAPLES: These companies can actually do well in an inflationary environment where consumers watch their spending and stick to basics.