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News & Views

Provided by the Investment Professionals of Frost Investment Advisors | March 07 , 2022

Military Conflict in Europe Fuels Inflation and Uncertainty

Russia Invasion Roils Markets

COVID-19 and Federal Reserve hawkishness have passed the “market uncertainty” baton to the crisis in Ukraine. The VIX, a measure of volatility in the S&P 500, rose to 36 at the end of February, its highest level since October 2020. Market breadth, a measure of the number of companies trading above or below their 200-day moving average, has plummeted to its lowest level since the early onset of the pandemic. The S&P 500 is now in correction territory after falling 12% year-to-date, with consumer discretionary stocks down 19 percent for the year. Energy and utilities stocks are the only sectors in the green since the year began. The tech-heavy NASDAQ 100 is down 17%. In Europe, the Euro Stoxx 50 is now in a bear market territory with a loss of 20%. Treasury bonds have generally been holding their own, while gold has been the frontrunner awakening from its slumber with a return of 11% year-to-date. We expect that the markets will continue to be affected by international events, which are very difficult to forecast.

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