Market action is kicking off the year in a near-exact replay of the first quarter of 2021. The long-standing stock market leaders are feeling the weight of higher interest rates and dragging down the performance for broad market capitalization weighted equity indices such as the S&P 500 Index.
These large-cap tech names have previously taken on the label of safe-haven assets, partly driven by their ability to not just survive but thrive as the world adjusted to the emergence of the COVID-19 pandemic. That status is increasingly in question as long-duration assets in both the bond and stock markets are being punished.
The current market dynamic is likely to be harder to reverse this year, however, as the Federal Reserve (Fed) is unlikely to veer from its path to normalize interest rate policy. Markets and the economy are unlikely to find the support of another “Fed Put” until high inflation is no longer such a prominent topic of national conversation.
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