Tech Wrecked As Fed Unfazed
U.S. equity markets finished broadly lower on the first week of 2022 while Treasury yields climbed to the highest level since January 2020 amid a sharp 'reopening rotation' from growth-into-value.
Ending the week on a four-day skid after eclipsing record-highs on Monday, the S&P 500 declined 1.9% on the week. The tech-heavy Nasdaq 100 plunged 4.5%, its worst week since early-2021.
After posting the strongest gains of any asset class in 2021, real estate equities had a rough start to 2022, but COVID-sensitive sectors, including office, hotels, and mortgage REITs rallied.
Employment data this week showed that despite the record surge in COVID cases and hospitalizations, the U.S. economy showed only modest signs of cooling in recent weeks. The workforce participation rate, however, remains stubbornly depressed.
Emblematic of a week that saw a sharp rotation from growth to value within the REIT sector, Life Storage declined more than 9% on the week despite becoming the first REIT to raise its dividend this year following a historic wave of over 130 REIT dividend increases in 2021.