M&R Capital Management is an investment advisory and asset management firm headquartered in New Jersey serving individuals, endowments, and businesses. In the article below, M&R Capital Management reports on the latest ups and downs of the market.
M&R Capital Management notes that there’s rarely a predictable week on Wall Street, but these past few weeks indicate that the stock market is in the middle of a ride that’s a bit wilder than usual.
Though the last trading week of February was bumpy, guided by fears of Russia’s invasion of Ukraine, fears turned to hope that the invasion would quickly end, which led to a rally of sorts.
Now this week, M&R Capital Management reports that stocks are closing lower again as the United States ban on energy from Russia weighs heavily on investors. On Tuesday, the Dow Jones Industrial Average, the S&P 500, and Nasdaq composite were all down — the Dow far down from an earlier 300-point jump.
That movement came following a series of events. President Joe Biden announced that the United States will ban energy and oil exports from Russia, adding to the worry over rising gas prices and potentially worsened inflation.
That, paired with a fear of recession and the consequences of the Russian-Ukraine war, has led to investors both selling off stocks quickly and stockpiling assets considered safe-havens according to M&R Capital Management.
Though the United States depends on Russian energy exports for 8% of its total imports of petroleum and crude oil, European countries heavily rely on both Russian natural gas and crude oil for energy.
The turmoil will likely have an impact on whether the U.S. Federal Reserve will raise interest rates. The Federal Reserve reportedly was considering a substantial bump in rates, but Jerome Powell, the Fed Chair, is now suggesting that interest rates may inch up by just .25% when the group meets on March 15 and 16.
Cybersecurity Tech Stocks May Soon Lose Luster
M&R Capital Management reports that tech stocks have not been immune to the stock market turmoil caused by the Russian invasion, but cybersecurity stocks have been an exception.
Many exchange-traded funds heavily stacked with cybersecurity company shares have jumped 10% since the conflict, mostly because of concerns about Russian-led cyber warfare against countries in the West.
It’s not all rosy though. Cyber EFTS are overall down 7% this year and other stocks have fallen harder, including CrowdStrike and Fortinet. Questions also linger about whether smaller cybersecurity firms can thrive in the shadow of big tech companies like Cisco and Microsoft.
That’s leading some economists to note that while valuations may be still high, much of the long-term strength of the cybersecurity market in 2022 remains up in the air. Still, one of the key drivers of acquisitions and mergers this year will likely continue to be cybersecurity, even as war rages, says Sapana Maheria, a GlobalData researcher.
Retail Investors Becoming More Aggressive
Motivated by a yearly decline of 10% in the S&P 500, more retail investors are scooping up stocks, say M&R Capital Management.
The company said that every week so far this year, its retail clients have stood out as net buyers of stocks, hoping for a stock market snapback rally. Bank of America says the investments have indicated that future stock market performance may be more positive than expected.
In the meantime, hedge funds are increasingly reducing their stock market exposure, according to M&R Capital Management. Last week, it saw a new record outflow from stocks held by hedge fund clients as an approach to decrease portfolio risk as Russia continues its invasion of Ukraine.
Which sectors have retail clients of Bank of American been buying into? Financials, industrials, and communication services.
Tech Stocks Continue to Plunge
M&R Capital Management explains that even before Russia’s invasion, tech stocks considered high growth were taking a beating on the stock market. Now several tech stocks are down a massive 75% from last year’s highs.
Among the hardest hit are fintech, cloud software, consumer devices, and e-commerce stocks. Investors began 2022 by moving away from such growth stocks. Nasdaq saw its worst month since March 2020 this past January.
The most notable $1 billion-or-more valued tech companies that have lost at least 75% of their values from previous highs include mobile commerce app Wish (down 90%), stock-trading app Robinhood (down 87% from a high in August), and Stich Fix (down over 90% from just a few months ago).
M&R Capital Management says many tech companies that thrived during the early days of the pandemic are now suffering on the stock market. Real estate broker Redfin saw its revenue grow by 117% in 2021, but shares are now 76% below their previous high last year.
Home market instant buying leaders Opendoor is down 78% from last year. Shares of Opendoor lost a massive 23% in just one day in 2022: Feb. 25, the day after Russia launched the invasion.
All information herein has been prepared solely for informational purposes, and it is not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy. Information is based on data gathered from sources that we believe are reliable. However, we do not guarantee the accuracy or completeness of this information. This information should not be used as the primary basis for investment decisions, nor is it advice meeting the specific investment needs of any investor.