Your Bank > Education and Advice > CNB University

Our Perspective on Recent Market Activities

Brian Murphy
Brian J. Murphy, CIMA®
Senior Vice President, Chief Investment Strategist
[email protected]
(585) 419-0670 x41933

Published November 30, 2021

Equity markets are down again today, after rebounding yesterday from Friday’s steep sell-off. Friday’s 2.5% drop took place as investors dealt with the news of another coronavirus variant labeled Omicron. The variant was originally reported in South Africa and has now been detected in other countries across the globe. This comes as some regions are still dealing with increased infection rates from the Delta variant.

Especially hard-hit Friday were cyclical stocks and anything in the travel/leisure sector, and bond yields dropped significantly with the 10-year Treasury closing around 1.48%.

Yesterday however, sentiment turned, and it seemed that the sell-off was overdone, and that markets would move past the concern as it has with other variants. While some countries have introduced new restrictions, overall, there seems to be little patience for the type of large-scale shutdowns that were originally instituted, and markets were up strongly on the idea that the global economic recovery will continue on.

Our guess is that moving forward we’ll likely see additional volatility as markets digest the continued news-flow around variants, inflation and the potential for rising rates. As it is, equity valuations are stretched, making the market’s position a bit more precarious.

However, we would urge investors to remain focused on the longer-term picture and some of the positives:

  • After a brief slowdown in Q3, GDP is likely to rebound sharply in Q4
  • Rates may begin to tick up, but will likely remain at historically low levels for the foreseeable future
  • U.S. consumers have a significant amount of cash on hand (over $4 trillion), and have proven their willingness to spend it
  • Corporate revenues and earnings have continued to outpace expectations
  • There are early indications that some of the supply/shipping constraints have begun to abate, and will likely continue to do so through early 2022, easing some of the inflationary pressures
  • The labor market continues its strong recovery with falling unemployment, a record number of job openings, and growing wages

At CNB Wealth Management, we continue to advocate for a strategic, long-term approach to investing. Short to intermediate-term market disruptions have and will continue to take place, but emotionally-driven reactions to them are most often counterproductive. Our diversified portfolios, and the disciplined rebalancing process we have around them, are designed to help mitigate risk relative to broader equity markets in times such as these. If you do have questions or concerns about your portfolio, please reach out to your advisor.

Data as of 11/30/2021.

This material is provided for general information purposes only. Investments and insurance products are not FDIC insured, not bank deposits, not obligations of, or guaranteed by Canandaigua National Bank & Trust or any of its affiliates. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please consult your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.